Oral Answers to Questions

TRADE AND INDUSTRY

The Secretary of State was asked—

Small Businesses

David Cameron: What steps she is taking to encourage small businesses to increase employment levels; and if she will make a statement.

Nigel Griffiths: We have given UK small businesses the best VAT threshold in the EU, cut the corporation tax starting rate to zero and created a sound and stable economy that has generated more than 1.6 million additional jobs since 1997. More people are now in work in Britain than at any time in our history.

David Cameron: What would the Minister say to the small business people who come to my surgery each week and list the Government-inspired reasons why they no longer want to expand their work force? What would he add to that list, which includes the national insurance increase, stakeholder pensions, the working time directive, new rules for employment tribunals and the fact that businesses are now treated like benefit offices? Will he confirm that the rate of small business failures has actually trebled in the past four years?

Nigel Griffiths: The national insurance increase that the hon. Gentleman mentions occurred in April and the employment figures were published yesterday. The House will be pleased to note that since April, 63,000 more jobs have been created than lost. Indeed, he will be very pleased to note that in his own constituency, the number of unemployed claimants has fallen by 76, to less than half the figure for 1997.

Derek Foster: May I praise the vigour and energy with which my hon. Friend is attempting to increase the number of start-ups in areas such as mine, which has experienced enormous difficulties for some 60 or 70 years? But may I ask him to bear in mind—this has little to do with Government policy—the swingeing increases in employers liability insurance, which are genuinely affecting employment prospects in many companies in my constituency and elsewhere?

Nigel Griffiths: That is obviously a very serious matter, on which a statement was made in the House before the recess. A report was published in June by the inter-ministerial working group, on which I serve, and placed in the House of Commons Library. It included a number of findings and recommendations, and a second report is due in the autumn. I hope that it will address some of the issues—as we have indeed done—to ensure that no business is left without that vital liability insurance. I am very pleased to have worked with the Federation of Small Businesses, the CBI small and medium-sized enterprises council and other representatives of business to ensure that the insurance industry itself is addressing this issue. However, we are constantly monitoring the situation.

Tim Yeo: The Minister will trumpet the latest employment figures, but what he does not tell the House is that many of the jobs to which he refers are not being created by small businesses; rather, they are jobs for Government-paid, pen-pushing bureaucrats. Does he believe that requiring small business employers to administer the Government's chaotic tax and benefit system and to become legal experts in every detail of employment law will make it more or less likely that they can continue to create jobs? Does he not understand that the accumulation of new employment regulations, often introduced with the best of intentions—to protect workers' rights—is now in danger of taking away their most basic right of all: the right to a job? Indeed, we can see that happening in Germany, France and Spain.

Nigel Griffiths: I prefer to be advised by Barclays than by the hon. Gentleman. Its recent survey points out that since 1997, 2.4 million new businesses have started in Britain, which is a result of the climate that we have established. If the hon. Gentleman wants to give lectures on bureaucracy, he has chosen the wrong place. Starting up a business in Britain now takes less than a day and costs less than £100; 10 years ago, setting up some businesses required 28 licences, registrations and certificates.

Patrick Cormack: That is all very well, but was my hon. Friend the Member for Witney (Mr. Cameron) right to assert that the rate of small businesses going down the drain has trebled in the past four years?

Nigel Griffiths: I have in front of me the figures for deregistrations—such figures are the most valid measure, and were accepted by previous Governments as well as by this one—which show that the failure of businesses in the past decade or so peaked in 1992. Indeed, in no year of the Labour Government have the figures reached anywhere near the horrendous levels of 1992, when 226,000 businesses went bust. Of course, we support all businesses, and most businesses that fail do so for honest reasons. But as I have told the House before, the real figure is the 2.4 million new start-ups and the best survival rates for small businesses for a decade.

Horse Racing

Chris Grayling: What discussions she has had with representatives of the British Horseracing Board about the Office of Fair Trading investigation into the control of British horse racing.

Gerry Sutcliffe: A number of written representations have been received from a variety of organisations in relation to that matter.

Chris Grayling: I represent one of the highest profile race courses in the world. My constituents will not suffer because Epsom will always be the home of the Derby, but those involved in racing are profoundly concerned about the impact of these proposals on the industry as a whole. Will the Minister ensure that the Office of Fair Trading report and any action taken as a result of it does not do irreparable damage to horse racing in this country?

Gerry Sutcliffe: I welcome the hon. Gentleman's interest in the matter and I understand that he represents Epsom. Clearly, however, he knows the rules of the competition regime that the Government have put in place, and that it would be wrong for me, as the Minister with responsibility for competition, to become involved in OFT investigations. I have worked closely with colleagues in the Department for Culture, Media and Sport and have put forward the concerns raised by the industry and on both sides of the House. I am sure that the OFT will take them into consideration, but, at the end of the day, it is the OFT's decision. I should clarify that this is not a Government-inspired investigation. It came about because the British Horseracing Board went to the OFT to secure a decision on certain practices within the industry. I hope that, as the process continues, hon. Members on both sides of the House will make contact with the OFT to express their views.

Jeff Ennis: Is the Minister aware that there are currently 59 race courses throughout Britain, nine of which are in Yorkshire—my home county and his? Under the current Office of Fair Trading proposals, up to six Yorkshire courses could be closed in the next few years. Does the Minister share my concern and agree that a sport such as horse racing requires a certain amount of central regulation, particularly in respect of the fixture list?

Gerry Sutcliffe: Again I welcome my hon. Friend's interest in the horse racing industry. I know that he is co-chairman of the all-party racing and bloodstock group—although I am never too confident about his forecasts on some of the horses that he tells us about. Clearly, he is right that horse racing is prominent and a large employer in Yorkshire. However, the position is that the sponsors of the industry fall within the remit of the DCMS and the competition issues fall within that of the DTI. As I said, it would be wrong for me to influence the outcome of the OFT report in any way, but I am sure that all the concerns will be passed on to the OFT.

Laurence Robertson: The Minister will be aware of my Adjournment debate on this matter later today. For now and for the record, is he aware of the letter sent to me by the Minister for Sport, which says
	"I share your view that full implementation of the OFT's rulings, as far as we understand them, may damage the fabric or integrity of the sport"?
	That is quite a profound statement. Is he aware of his powers under section 3(3) of the Competition Act 1998, which states that the Secretary of State may at any time by order amend schedule 3 with respect to the prohibition by providing for one or more additional exclusions? Does the Minister not accept in general terms that sport should qualify for such an exclusion?

Gerry Sutcliffe: I look forward to debating the issue with the hon. Gentleman in greater detail later today, when I hope we can get to the heart of the matter. The letter that he received from my right hon. Friend the Minister for Sport is entirely appropriate. The DCMS covers the horse racing industry and the hon. Gentleman has expressed his concerns. My responsibility in the DTI is for the competition regime and we are still awaiting the outcome of the OFT deliberations.

Pete Wishart: Is the Minister aware that small but extremely successful national hunt courses, such as Perth race course in my constituency, are deeply concerned about what is being included in the Office of Fair Trading report? What words of comfort can he give to Perth race course that national hunt racing will not be a casualty in this process of change?

Gerry Sutcliffe: I acknowledge the hon. Gentleman's point and I refer him to my right hon. Friend the Minister for Sport. National hunt horse racing—and, indeed, the welfare of all courses—is important. Clearly the words of comfort will have to await the outcome of the OFT report.

Carlton-Granada Merger

Chris Bryant: If she will make a statement on the proposed merger of Carlton and Granada.

Patricia Hewitt: The Competition Commission submitted a report to me on the proposed merger on 21 August. In accordance with the usual practice, I shall announce any decisions on the report when it is published. I have informed the parties that I aim to publish the report by the week beginning 6 October.

Chris Bryant: My right hon. Friend will know that protracted negotiations are taking place between Carlton, Granada, Sky, Channel 4 and S4C about maintaining the free-to-air option on digital satellite. There is a real possibility that unless some swift resolution is found, people will not be able to watch free-to-air "Coronation Street", for instance, on Christmas day and Boxing day. I therefore urge my right hon. Friend to provide a swift resolution, along the lines that she has suggested today, so that Carlton and Granada can sort out their business plans and make a significant contribution to sorting out the problem.

Patricia Hewitt: I entirely share my hon. Friend's concern about "Coronation Street" on Christmas day, but of course long-standing arrangements enable ITV to negotiate as a network, and it is doing so. Regardless of any decision on the proposed merger—it would be wrong for me to comment on that now—it would in any case be necessary for the new provisions in the Communications Act 2003 to come into effect, which is unlikely to happen until the end of the year.

Lawrie Quinn: My right hon. Friend will know of the excellent production values and the great creative talent that both companies possess, especially the Granada group, which includes Yorkshire Television. My hon. Friend the Member for Rhondda (Mr. Bryant) mentioned "Coronation Street", but my right hon. Friend will know that "Heartbeat" is produced in my constituency. That programme is a great showcase for this country and brings in many tourists. Can my right hon. Friend confirm that the merger will not compromise the excellent production values of companies such as Yorkshire Television, but will in fact enhance the showcasing of the wonderful county of Yorkshire?

Patricia Hewitt: I know that my hon. Friend will understand that I cannot comment on the proposed merger or the report from the Competition Commission, which I shall publish. However, the whole issue of maintaining excellent quality production in the United Kingdom is an important theme in the Communications Act 2003, which my right hon. Friend the Secretary of State for Culture, Media and Sport and I have recently piloted through the House. I know that my hon. Friend will support us in putting the Act into effect.

World Trade Talks (Developing Countries)

Anne Campbell: What assessment she has made of the impact of the world trade talks in Cancun on developing countries.

Patricia Hewitt: I made a full statement on the recent World Trade Organisation ministerial conference yesterday. The statement included an assessment of the impact on developing countries of our failure to reach agreement.

Anne Campbell: I share my right hon. Friend's disappointment that no agreement was reached in Cancun. Can she reassure me that there will be no going back on the progress that was made through negotiations, and that EU Ministers will not expect the Commissioner for Trade to press for agreements on investment and competition, which was one of the causes of the failure?

Patricia Hewitt: My hon. Friend raises an important point. As I said yesterday, if we are to make progress and reach the agreement that we should have reached at Cancun, all member countries will have to pick up from where we left off in Cancun, where we were closer to agreement when we left than when we arrived. I shall seek an early opportunity to talk to ministerial colleagues in the European Union and directly to Commissioner Lamy to ensure that the European Commission, in negotiating on our behalf, sticks to the position that we took—with the full support of the Council of Ministers—that we would no longer press for negotiations in the WTO on investment and competition.

Robert Smith: Could the Secretary of State clarify the report in yesterday's Financial Times that Pascal Lamy was contemplating moving to bilateral negotiations as a result of what had happened in Cancun? If we are trying to persuade the US not to take the bilateral approach, what discussions has she had with EU colleagues to ensure that that report is erroneous and that the EU will stick to the Cancun approach?

Patricia Hewitt: The Commissioner not only made plain his commitment to multilateral negations, but he reflected the fact that the Council of Ministers will need to discuss our stance on bilateral agreements. Several countries would like bilateral agreements with the EU. Quite rightly, we have put all our effort and energy into the WTO talks and the Doha round, rather than into bilateral agreements. We all need to look at that matter, as one undoubted consequence of the failure to agree at Cancun will be that there will be more of those bilateral agreements, including between G21 members. Our priority in Europe should remain the strengthening of the WTO, and trying to get the Doha round back on track.

Adrian Bailey: I welcome the emergence of the G21 countries as a power bloc within the WTO, and the possible change in the balance of power inside that organisation. Will my right hon. Friend assure me that the Government will do all in their power to ensure that that development, and the possibility that bilateral trade talks might be opened with some countries, does not prejudice the prospects of the very small and underdeveloped countries that are not part of the G21 bloc?

Patricia Hewitt: My hon. Friend raises an extremely important point. There was a tendency in much of the early comment on the G21 group to assume that it spoke for the whole of the developing world. Not surprisingly, that was resented quite strongly by many of the smaller developing countries, not least those in Africa. Clearly, it is not up to us to decide what countries such as Brazil, China and India do in the future, but we will continue to speak up for the interests of the poorer developing countries. They had the most to gain from an agreement at Cancun, and from successful completion of the Doha round. We will continue to put their interests first in the work that we do, both on trade and on development.

Post Office

Mark Simmonds: If she will make a statement on the take-up of the Post Office card account and its effects on the post office network.

Stephen Timms: I understand from the Department for Work and Pensions that by 5 September just over 1 million customers had requested a Post Office card account, and, from the Post Office, that 566,000 card accounts had been opened by that date. I expect the accounts, and the expansion of banking at post offices, to have a positive effect.

Mark Simmonds: The House and the country will be relieved that postal workers have defied their left-wing leadership, but the Minister should be aware of the great concern that exists about the Post Office card account, in Lincolnshire and across the UK. What justification can the Minister assemble for the fact that it has been made virtually impossible for elderly and vulnerable people to remove money from rural post offices? Many of those offices have been rendered unsustainable, and that could rip the heart out of many rural communities.

Stephen Timms: The hon. Gentleman is quite wrong. The Government have invested £500 million in the technology for universal banking. Contrary to the predictions of Opposition Members, that was a successful IT project: it started up on time and is working extremely well. It gives the Post Office an opportunity to serve millions of bank current accounts, which was not possible in the past. That is a fantastic opportunity for post offices, and they are moving to take advantage of it.
	I can tell the hon. Gentleman that well over 50 per cent. of pensioners—55 per cent. at the last count—who have received letters from the Department for Work and Pensions have requested card accounts. It is completely wrong to say that it is impossible for them to do so. Indeed, Postwatch has carried out surveys of those who have used the helpline. The results show that 88 per cent. of pensioners said that the advice was given to them in a clear and unbiased manner, and that 95 per cent. said that their questions were answered satisfactorily. There is a fantastic opportunity for the post office network arising from the Government's investment of £500 million. I hope that the hon. Gentleman and other hon. Members will encourage local sub-postmasters to make the most of it.

Bill Tynan: Does my hon. Friend agree that a major problem with Post Office accounts is that many elderly and housebound pensioners are unwilling to give their PIN to social workers who collect their pensions for them? What measures will he put in place to ensure that their accounts are secure?

Stephen Timms: My hon. Friend raises an important point. We have been careful about the security of accounts. It has been arranged that a second card with a separate PIN will be available for use at a pensioner's local post office by a nominated person, such as a social worker. We hope that that will be a secure arrangement for the collection of money.

Peter Duncan: The Minister will be aware that take-up of the Post Office card account in Scotland is severely constrained by the continued failure to secure agreement between post offices and clearing banks in Scotland. May I give an assurance that he will intervene to resolve that situation, which is creating ongoing problems for many of my constituents and for many people in rural Scotland?

Stephen Timms: All the major banks in the UK, including those in Scotland, have basic bank accounts that can be accessed at the local post office, so I do not think there will be a problem along the lines the hon. Gentleman set out. Of course, it would certainly be helpful if other clearing banks followed the example set by Lloyds TSB, Barclays and Alliance & Leicester in opening up all their current accounts to post office access. That would be most welcome. The fact remains, however, that every bank has a basic bank account that can be operated at a local post office.

Harry Barnes: How many people are pushed into using bank accounts instead of Post Office card accounts because the closure of their local post office makes things difficult for them? At present, that is a problem at Coal Aston in my constituency. It would be a bad thing if people were put off the scheme and its provisions because they no longer had a proper post office.

Stephen Timms: It is important to bear in mind that people wanting to use their local post office can do so with a basic bank account and with several ordinary bank accounts, as well as with a Post Office card account. However, I have some good news for my hon. Friend about migration. The urban reinvention programme was built on the assumption that 80 per cent. of the business from a closing office would transfer to another local post office. The first evidence, from the 200 post offices that closed in March and April, is that the proportion migrating to another post office was even higher; the figure was 85 per cent. in March and 87 per cent. in April. A good and high proportion of people are going to another post office in their local area.

Vincent Cable: Further to that answer, can the Minister confirm that if bank customers are to be able to draw cash across the counter at the post office, their bank needs to have a banking services agreement with the Post Office, and that four of the leading banks—Halifax, Bank of Scotland, Royal Bank of Scotland, Abbey National and HSBC—are refusing to enter into such agreements? [Hon. Members: "That's five."] Well, two of them have merged.
	What are the Minister's ideas for persuading those banks to join the system, as, if they do not, all their millions of customers will, in effect, be lost to the Post Office?

Stephen Timms: As I mentioned a moment ago, all the banks to which the hon. Gentleman referred have basic bank accounts that can be accessed at local post offices. It is the case, however, that their other ordinary current accounts cannot currently be accessed at the post office, unlike the 20 million current accounts with Lloyds TSB, Barclays and Alliance & Leicester that can be fully accessed. The Post Office is in discussion with the other banks about signing such agreements with them, too, and I wish them well in that work. Increasingly, those banks' customers will want to be able to access their accounts at their local post office just like customers of Lloyds TSB, Barclays and Alliance and Leicester. That may prove to be the most effective lever.

Tim Yeo: Will the Minister join me in congratulating members of the Communication Workers Union on exercising rights given by Conservative employment laws to turn down the call from their union leaders for a strike that would have been extremely damaging?
	On the post office network, is it not the case that post offices are likely to close more quickly if the Post Office cannot reach agreement with the banks to enable benefit claimants and pensioners to receive cash across the counter? Coupled with the obstacles that the Government have put in the way of pensioners who want to open Post Office card accounts, does not that mean that vulnerable people are suffering and that the post office network is likely to contract even more quickly because of the Government's policy?

Stephen Timms: rose—

Mr. Speaker: Order. The Minister will not answer questions about the postal dispute, which has nothing to do with the matter before us.

Stephen Timms: I am grateful for your guidance, Mr. Speaker.
	On the point about pensioners using post offices, I have already told the House that 55 per cent. of pensioners who were asked have already chosen a Post Office card account, compared to 28 per cent. of benefit recipients altogether. What that shows is that the Post Office card account is very attractive to pensioners and they are getting their Post Office card accounts as a result, but what is really important for the Post Office, particularly in the long term, is not to miss the much bigger opportunity of ensuring that customers who are familiar with using bank accounts can use their accounts at their local post office if they want to do so. The Post Office needs to make the most of that big opportunity.

Andrew Robathan: If she will make a statement on recent progress with the urban network reinvention programme for the Post Office.

Stephen Timms: By the end of August, 492 post offices had closed under the programme. In response to observations by hon. Members and others, Post Office Ltd. intends to complete the programme now on an area-by-area basis. The areas will comprise groups of parliamentary constituencies; the Post Office will consult on a single plan comprising all the proposals in each area; and public consultation on each proposal will last for six weeks. The Post Office has also announced an acceleration of the programme: it now aims to complete the consultations on all its proposals in every area by December next year.

Andrew Robathan: It is the acceleration that I am concerned about. Following a parliamentary question that I tabled in April, I corresponded with David Mills, the chief executive of the Post Office, about paying bonuses to managers for closing down post offices as quickly as possible. Will the Minister confirm that the Post Office is indeed paying managers bonuses to close post offices? Is this the first time that taxpayers' money has been paid in bonuses to close down part of a highly valued public service in the teeth of strong opposition from those same taxpayers?

Stephen Timms: No, Mr. Speaker, that is not the case. There is no financial incentive for managers to close post offices. The hon. Gentleman has made that point on a number of occasions, but it is simply incorrect. Each closure involves a very careful process. There is thorough consultation, and we have given substantial funding to Postwatch to carry it out very carefully. Quite a number of the proposals have been varied as a result of that process. What is important, of course, is that it is I think widely accepted that the number of urban offices needs to be reduced to ensure a sustainable future for the whole network. That needs to be carefully managed, which is the aim of the programme, and I believe that it is succeeding.

Richard Burden: I welcome the change to an area-based approach to the reinvention programme because one of the problems has been that branch closures were often considered in isolation from one another, but will my hon. Friend speak to the Post Office to ensure that proper consultation takes place on the strategy? Local communities have to be involved because the benefits offered by the plan will be lost if local communities—rather than the usual suspects—are involved only in proposals to close branches, rather than in building confidence in the overall strategy.

Stephen Timms: I very much agree with my hon. Friend both about the benefits of the changed arrangements and about the importance of thorough and careful consultation throughout, particularly involving local communities, on the plans for an area. I will certainly ensure that the points that he makes are passed on to Post Office Ltd.

Louise Ellman: Will my hon. Friend ensure that the needs of vulnerable people in deprived urban areas remain paramount under the programme? Will he consider extending the support available to post offices and sub-post offices to enable them to increase the range of work that they undertake, to permit them to remain open in a viable way?

Stephen Timms: I very much agree with my hon. Friend that the impact on vulnerable people and people who are not very mobile is an essential element in reaching all these decisions. I think that she would agree, however, that a properly managed programme of this kind is much better than the alternative—disorderly decline—because there has been a reduction in business and it is therefore important that we have a programme that ensures that network coverage continues to be effective throughout all areas. At the end of the programme, 95 per cent. of the urban population will still be within a mile of their local post office, but I agree with my hon. Friend about the importance of ensuring that the needs of vulnerable people in each area are properly taken into account. Funding is available to improve offices, and I want to ensure that we make a success of that part of the programme, as well as the closures.

Nick Gibb: Will the Minister take this opportunity to apologise to the people of Pagham for the closure on 18 August this year of the Pagham post office, and for the enormous inconvenience and expense that that is causing to many hundreds of elderly and in many cases infirm people, who have had to go to enormous lengths to find alternative post offices from which to collect their pension?

Stephen Timms: I can only say to the hon. Gentleman that I know well that this closure has caused a good deal of concern, and he has frequently been in correspondence with me about it. I have looked at the procedure that was followed, and found that there was a thorough consultation process, on the basis of which the Post Office reached the decision that led to the closure. Of course, every community will regret the closure of a local post office, but the reality is that as we were in a position in which over 1,000 urban post offices had 10 or more other branches within a mile, a process of rationalisation was necessary.

Electronics Industry

David Cairns: What estimate she has made of the number of manufacturing jobs in the UK electronics sector that have been lost to eastern Europe in the last five years.

Jacqui Smith: In the face of stiff global competition, UK electronic manufacturing jobs, particularly lower value-added ones, have moved to other parts of the world including eastern Europe. That is why the Government have set up, with industry, an electronics innovation and growth team to establish a long-term strategy for the sector to compete globally, exploiting its strengths.

David Cairns: I thank my soon-to-be right hon. Friend for her answer. May I tell her that in the last few months alone my constituency has lost several hundred jobs in the electronics sector to eastern Europe, with the prospect of more to follow? We cannot compete with the wage rates being offered in eastern Europe or China, and nor should we try, but the electronics sector has been good for my constituency and good for the UK economy over many years. What assurances can she give my constituents that this Government remain committed to a strong and vibrant UK electronics industry, and what practical steps can we take to ensure that good, high-paid, high-skilled jobs can be retained in Scotland and elsewhere?

Jacqui Smith: My hon. Friend has been an important champion for the electronics industry in his constituency. Rightly, however, he understands and emphasises the need to ensure that we concentrate, as the Government have said in their manufacturing strategy, on how we move those industries up the value chain to focus on higher-technology, higher value-added production and jobs. That is the task for the innovation and growth team, who are starting by assessing the global competitiveness of the electronics industry, but who will be developing a programme for the future development of the electronics industry and making specific recommendations to Government. I expect that to help with some of the encouraging signs that we are seeing in the electronics industry, which I was able to discuss yesterday with the Engineering Employers Federation. I would also expect that to impact on my hon. Friend's constituency, where, clearly, electronics, and particularly that more sophisticated work, is crucial to his constituents.

Robert Key: Only yesterday, my constituent, Kate Williams, e-mailed me to say that at the ripe old age of 21 she was concerned for her job. Are there any international treaty obligations, trade arrangements or codes of practice, in an increasingly globalised economy, whereby the Government are concerned to ensure that the impact on the countries that are taking those jobs is not to their disadvantage in the longer run? That applies not only across the electronics industry but in financial services, too.

Jacqui Smith: The hon. Gentleman, as we all are, is rightly concerned about the job and economic prospects for his constituents. The emphasis that we need to place, however, not only in electronics but more broadly in manufacturing—and the emphasis that this Government, in the first manufacturing strategy for 30 years, have placed—is on both the practical support and Government action necessary to ensure that we build our manufacturing industry on the basis of high-value-added jobs with high pay and high levels of skills. I assure the hon. Gentleman and his constituents that that is what we have planned and what we will do.

Martin O'Neill: Can my hon. Friend tell us what she proposes to do to help secure those more highly skilled jobs? One of the difficulties of the flight of jobs eastward has been that, in the main, they have not been of the highest order and skill content. The people who are left are not yet properly equipped to take on the kind of employment for which she has ambitions. In the interim, it is essential that we do far more in those particularly vulnerable areas to get the skill levels up. Although that is not exclusively the responsibility of the DTI, it is a matter on which she could surely act and lever more resources to get these people the skills they require to become potentially attractive employees.

Jacqui Smith: My hon. Friend raises a crucial point. When talking about jobs moving perhaps from assembly and straightforward manufacture in the electronics industry to the configuration of systems and support for those systems, it is certainly the case that we need to focus on skills. That is why one of the key elements of the manufacturing strategy is the development of skills and why my right hon. Friends the Secretaries of State for Trade and Industry and for Education and Skills published the skills strategy just before the recess. We shall focus on how we can ensure that there will be a better response to employers' needs and the delivery of skills for precisely the sort of workers about whom my hon. Friend talks. Specifically on electronics, SEMTA, the new sector skills council that covers electronics, was licensed in April. I know that it, the Department of Trade and Industry, the Department for Education and Skills and the devolved Administrations in Scotland are working hard to ensure that we make the UK No. 1 for the supply of skills for information technology, telecommunications and electronics because that is how we shall make the electronics industry a success and provide opportunities for the constituents of my hon. Friend and others who work in the electronics industry.

Michael Fabricant: The hon. Lady is quite right to point out the difference in wage costs, but that is not the whole picture, is it? There are more reasons why companies such as Siemens up sticks and move across to Germany and why Xarr in Cambridge moves to Sweden than only differential wage costs. That happens because the growth of this country's productivity since the Labour Government got in is only half that recorded when the Conservative Government were in power. We now find out from the European Union that our monthly wage costs are the second highest in the EU—Germany and France are cheaper than us. How will she reverse that damaging trend?

Jacqui Smith: The first thing that I shall not do is to take lessons on job creation from Conservative Members. However, they fairly highlight the challenge that the Government have taken up to ensure that we improve productivity and competitiveness for our manufacturing industries. As I have spelled out on our manufacturing strategy, we have not only outlined the problem but put in place macro-economic stability and supply-side policies, which the Conservative Government were unwilling to do. They will make a difference to our manufacturing industry, safeguard high-quality jobs and provide the wealth for this country that the Conservative Government so sadly failed to do in relation to the manufacturing industry.

Andy Burnham: May I welcome yesterday's news that unemployment is at its lowest level since 1975 but urge the ministerial team not to allow celebrations to obscure the fact that severe problems exist in manufacturing, especially in areas such as Leigh? In August, the electrical components manufacturer Electrium announced its closure in my constituency, which will result in the loss of 160 jobs. That is the seventh major redundancy in the past two years in the manufacturing sector and, in total, more than 1,400 jobs have gone. Will my right hon. Friend speak urgently to the Northwest Development Agency to examine the problems in our local manufacturing base and, especially, to find out whether more help could be given to the manufacturers that remain, such as Barlo engineering in Leigh?

Jacqui Smith: I hope that my hon. Friend does not believe that we are complacent. I would like to characterise us as having a steely determination to ensure that UK manufacturing industry is able to come out of that situation in the face of significant global competition and challenges and be as profitable and significant for the UK economy as we know that it should. As I said, I spoke to the Engineering Employers Federation yesterday about its view on optimistic signs for the engineering industry and its strong view—with which we completely concur—that we need continued Government action on innovation, skills and investment to create the manufacturing industry that we all want.
	My hon. Friend also raises an important point about the role of regional development agencies, which now have more funding, more flexibility and a more specific remit for working in the manufacturing sector. The Northwest Development Agency will play an active role in both safeguarding and creating high-quality manufacturing jobs.

Post Office

David Taylor: If she will make a statement on recent progress with the urban network reinvention programme.

Stephen Timms: I refer my hon. Friend to my earlier answer.

David Taylor: Notwithstanding the Minister's earlier answer, does he not accept that the Post Office is conducting the network review in a somewhat confused, incoherent and clumsy fashion while the benefit payment hotline is without doubt coercing some card account applicants into considering direct payment instead? Does he therefore understand why so many of us fear that the present unacceptable rate of branch closure will accelerate unless and until the asset-stripping top management is replaced by those with a vision of a vibrant third-millennium Post Office?

Stephen Timms: I think it has been a rather good 24 hours for the Post Office management. I do not agree with my hon. Friend about the urban reinvention programme. However, I think that he will welcome the different arrangements that I have described, which will apply from hereon, because they will provide the opportunity for a strategic overview to be taken of the pattern of the post office network throughout an area, as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) said.
	On the helpline, I told the House that the evidence is that pensioners are getting the information they want. They are finding it helpful. My hon. Friend will be aware that people are increasingly choosing to use bank accounts. Some 43 per cent. of benefit customers now do that—up from just 26 per cent. in 1996—and 60 per cent. of new pensioners have already chosen a bank account in which to receive their pension. The Post Office needs to adapt to the new environment and new needs.

Anne McIntosh: Will the Minister confirm that no customer will be more than 1 mile from a post office under the urban network reinvention programme? What is the comparable figure for rural post office customers?

Stephen Timms: The requirement that we have placed on the Post Office is that 95 per cent. of urban residents should be within 1 mile of their local post office at the end of the process compared with something like 97 per cent. today. I do not have the comparable figure for rural post offices, although I shall send that to the hon. Lady.

World Trade Organisation (Cancun)

Jim Cunningham: If she will make a statement on the World Trade Organisation negotiations in Cancun.

Mike O'Brien: Yesterday my right hon. Friend the Secretary of State made a statement to the House on the World Trade Organisation summit at Cancun. My right hon. Friend said that we need to renew discussions based on the concessions offered by delegates at Cancun.

Jim Cunningham: I thank my hon. Friend for that answer. I am sure he will appreciate that the situation is serious for the third world. In light of his answer, does he have a time scale for restarting talks with our European partners so that we protect the third world from the worst effects of the breakdown of the talks?

Mike O'Brien: At Cancun a deadline was set of 15 December for a meeting of officials to resolve the issues not sorted out at the WTO summit. My right hon. Friend and I talked to Dr. Supachai, the director-general of the WTO, about how the UK can help to drive the agenda forward. We made it clear that investment and competition should be off the agenda. In addition, the International Monetary Fund and the World Bank have announced a new initiative to help developing countries to overcome problems in adjusting to a new trading environment. The UK will make a substantial input into the design and implementation of that initiative, so that will help. We are also providing extra funding to developing countries to assist them with the negotiations. In terms of a deadline, we are looking at 15 December, and the UK is doing all it can to help drive negotiations forward.

Ceramics Industry

Ann Winterton: What assessment she has made of the competitiveness of the UK's ceramics industry.

Jacqui Smith: A strategic analysis of the sector was undertaken in 1999, and that study led to the establishment of the ceramic industry forum, which focuses on improving competitiveness in the sector, supported by £3.3 million of DTI funding. Ministers and officials also maintain close contact with firms and intermediaries in the ceramics industry through regular meetings covering a wide range of issues.

Ann Winterton: Does the Minister acknowledge that a major reason why the United Kingdom's ceramic industry has been better able than its European counterparts to withstand competition from low-cost manufacturers is the comparative flexibility of the UK's labour markets introduced, I hasten to add, by a Conservative Government? However, is she aware that ceramic firms in my constituency and, indeed, the British Ceramic Federation fear that that advantage is being severely diminished as a result of the Government's incessant implementation of added costs and regulations, many of the latter unrelated to the industry's purpose or, indeed, its impacts on, for example, the environment?

Jacqui Smith: The success of the ceramics industry probably also has something to do with the skills and dedication of the work force and the expertise of management. Nevertheless, the hon. Lady asked a question about regulation. As the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths) made clear in response to question 1, we take that issue seriously with respect to both new and existing businesses. However, as the Organisation for Economic Co-operation and Development recently pointed out, under this Government, the UK is one of the most effective and efficient countries in which to do business. I have no doubt that that will continue.

MINISTER FOR WOMEN

The Minister was asked—

Private Members' Clubs

Robert Walter: What plans she has to introduce legislation to provide for equality of membership rights in private members' clubs.

Jacqui Smith: It is unacceptable for women to be treated as second-class citizens in private clubs, contrary to the Government's principles of opportunity for all, and I know in this context at least, the hon. Gentleman's view of those principles. We have supported private Members' legislation in this area in the past, and we are keeping the situation of private clubs and sex discrimination under review.

Robert Walter: I think that many Members will be disappointed by that answer, as I am not sure that the Government have supported private Members' legislation. On three occasions, I have introduced legislation in the House, and the hon. Member for Gloucester (Mr. Dhanda) introduced a Bill in this Session that made no progress because of lack of Government support. In the other place, legislation completed all its stages and arrived in this House in the last Session, despite the fact that it had the full support of the Government Front Bench in the other place. Can the Minister give us a clue as to whether the Queen's Speech contains legislation on the subject?

Jacqui Smith: The hon. Gentleman knows that, much as I respect his position on this issue, I will not give him any clues about what is contained in the Queen's Speech. Much as I share his concerns about this particular discrimination, the timing of the introduction of legislation is not always the responsibility of individual Ministers. I assure him that we have supported private Members' legislation and will keep this area under review. Subject to parliamentary time in future, there may well be opportunities for us to take action.

Maternity Provision

Ben Chapman: If she will make a statement on maternity provision for working women.

Patricia Hewitt: Maternity leave and pay were increased in April 2003 as part of our new measures to help parents balance work and family life. All mothers can take 26 weeks ordinary maternity leave, and maternity payment has been increased to £100 a week. Because we have reduced the qualifying service for additional maternity leave, most mothers can also now choose to take up to one year off work in total.

Ben Chapman: It has been argued that the proposals introduced by the National Institute for Clinical Excellence to expand and standardise the provision of IVF in the national health service would help those women who choose to start a family after establishing their career. What is my right hon. Friend's view of the belief that IVF facilities could be of value in achieving equality in the workplace?

Patricia Hewitt: My hon. Friend makes an important point. Clearly more women are choosing to postpone having a family, then sometimes discovering that they have an unexpected and extremely distressing problem of infertility. My right hon. Friend the Secretary of State for Health and his colleagues are currently looking at NICE's draft proposals, and we at the DTI will continue to do everything that we can to support parents in balancing their work and family life.

Caroline Spelman: First, I wish the Minister a speedy recovery from what sounds like the Cancun cold.
	Women returning to work after having a baby need to be able to achieve a good work/life balance. Six months ago, the Government launched an initiative to give parents with a child under the age of six the right to demand flexible hours. However, in a recent survey by KPMG, it was discovered that only one in 1,300 workers had taken advantage of those new laws. Can the Minister explain why the uptake is so poor?

Patricia Hewitt: We are working closely with employers and trade unions to ensure that parents know their new rights and can take advantage of them, but the low take-up so far partly reflects the fact that the new rights have been in effect for only a couple of months, and the fact that, particularly in the public sector, but also in a growing number of private sector companies, a great deal of flexibility is already available. What we have done through the new legal measures is to strengthen the changes that are already taking place. We will go on doing everything we can—with the hon. Lady's support, I hope—to ensure that parents working in companies that do not yet offer those benefits of flexibility feel empowered to take up the new rights we have given them—against, I recall, the opposition of the Conservative party.

Sandra Gidley: Is the Minister aware that despite the increase earlier this year, a survey of 60 countries showed that maternity pay in the UK is in the bottom quarter, and that a woman living in the UK and earning £15,000 a year would receive £2,458 over six months, which is just over half the EU average of £4,198? When does she expect the levels in the UK to reach the EU average?

Patricia Hewitt: We have taken an enormous step forward in increasing levels of maternity pay and increasing the right of women to take maternity leave. In addition, we have introduced for the first time ever two weeks' paid paternity leave for new fathers. I note that the Liberal Democrats want to increase public spending. No doubt they will publish proposals for increased taxation to match that.

Employment Opportunities

Michael Fabricant: What steps she is taking to increase the number of women employed in service industries; and if she will make a statement.

Jacqui Smith: It is a pleasure to answer the hon. Gentleman's questions twice in one hour. Action to make work pay and to help parents balance work and family life will promote employment opportunities for women across the labour market, including service industries. For example, 70 per cent. of those benefiting from the national minimum wage are women, and we estimate that the duty on employers to consider seriously requests for flexible working will enable 55,000 mothers to return to work.

Michael Fabricant: I thank the Minister for that answer. We will probably get on better in this second session than in the first one. Does she agree that the appointment of Barbara Cassani as the chief executive of the British Olympic Association bid is a good example of how women can play an important role in service industries? What steps is the Department taking to increase the aspiration of young women going into business not to go into service industries to work at checkouts in places like Waitrose, or even, dare I say, into hairdressing, but to go into areas such as banking and the promotion of Britain?

Jacqui Smith: I share many of the hon. Gentleman's—

Andrew Mitchell: —hairdressers.

Jacqui Smith: No, but I share his view that hairdressing is an important and honourable profession. We must be careful not to denigrate the areas of work that women go into, although we must make sure that they are getting proper training and proper pay. The hon. Member for Lichfield (Michael Fabricant) makes an important point about women in leadership positions. One of the issues that concerns us is how we can ensure that more women get into our boardrooms, where their contribution in a leadership role would be good for businesses, good for their profile, and as the hon. Gentleman points out, good for other women going into business and aspiring to the higher levels. The hon. Gentleman is right: we can certainly agree on that today.

Anne Campbell: Does my hon. Friend agree that this Government's record on increasing the availability of child care as well as introducing working tax credits has done more than anything else in recent history to improve the employability of women not only in the service industries, but in higher paid jobs in professional and manufacturing industries?

Jacqui Smith: My hon. Friend makes a very important point. Of course, it is not only about aspirations for women to be able to enter the workplace, but about taking action, as this Government have been willing to do with respect to child care, the new deal for lone parents and partners, the child tax credit and the support that we are giving to women entrepreneurs, which will make a difference for women in the choice that they can make about whether they work. That is good for those women and our economy and businesses, and our society as a whole.

Women's Income

Hugh Bayley: What assessment she has made of the impact of the Government's tax credits and benefits changes on women's income.

Patricia Hewitt: Changes in tax credits and benefits between 1997 and October 2003 will mean that, on average, men gain £1.58 a week and women gain £14.34.

Hugh Bayley: I am glad that the Government share my view that, when it comes to the welfare of children, it is important to transfer money from the wallet to the purse. What proportion of those receiving the new tax credits are women and what proportion are men? Now that we have had the opportunity to overcome the teething problems of the introduction of the new tax credits, can my right hon. Friend tell me how many men and women in the UK now receive them?

Patricia Hewitt: More than 85 per cent. of child tax credit awards are being paid to women. Of course, that reflects the choices that parents themselves are making. While I agree with my hon. Friend's general point, I should add that there is a growing minority of families in which the father is the main carer of the child. It is extremely important that he should also have access to child tax credits and child benefit. We are now paying out child tax credits and other family tax credits to millions of families throughout the United Kingdom, all of whom have warmly welcomed this increase in their family incomes.

Business of the House

Eric Forth: May I ask the part-time Leader of the House to give us the business for next week?

Peter Hain: I am delighted to see that the prefix has returned, because it was omitted last week and I felt a little neglected.
	The business for the week after the conference recess will be:
	Tuesday 14 October—Remaining stages of the Crime (International Co-operation) Bill [Lords].
	Wednesday 15 October—Opposition Day [18th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
	Thursday 16 October—A debate on defence policy on a motion for the Adjournment of the House.
	Friday 17 October—The House will not be sitting.
	The provisional business for the week after will include:
	Monday 20 October—Remaining stages of the Courts Bill [Lords].
	As the House will know, I informed the House yesterday of the date of the Queen's Speech. I intend to publish an annual calendar for this House for the new Session next month.

Eric Forth: I am sure that the House will be particularly grateful for that last item.
	Unusually, yesterday's Prime Minister's questions were almost completely free of porkies, obfuscations and evasions, so I think that we will leave them for another day. Following up what the part-time Leader of the House said about the date of the Queen's Speech, for which we are grateful, and given that it is relatively late this year, can he tell us how much pre-legislative scrutiny of Bills can now take place before the new Session? A great song and dance has been made about pre-legislative scrutiny. I am sure that it is welcomed in all parts of the House, but we would like a bit of substance from the Government about how much scrutiny will be conducted and which Bills we will see before the late start of the new Session.
	When will the pre-Budget review take place? Is the Chancellor eager to come to the House and give us his review of the state of the economy? Perhaps we could get a date for that. Are the Government now going to set about prioritising their business ahead of 26 November to ensure that they have an appropriate amount of business, not least in another place, to honour the date of the Queen's Speech? I should be interested to get a glimpse into how the Government think that they are going to get their business through Parliament, especially through another place, while honouring that date of 26 November.
	I wonder whether we could have a debate entitled, "Do Ministers care so little about MPs and Parliament that they neglect their duties in the recess?" I say that because a letter has fallen into my hands from a nice young man called Gerry Sutcliffe MP, who appears to be Minister for Employment Relations, Competition and Consumers. On 19 August, he wrote a letter to one of my colleagues that began:
	"Thank you for your letter of 14 July".
	It may seem unexceptional in this day and age that a Minister should take a month to write to a Member of Parliament—there is nothing unusual about that—but the really interesting bit comes next. This nice young man, Gerry, says:
	"During parliamentary recess, Mr Sutcliffe is out of the office and unable to answer your query. Upon his return in September, he will ensure that your query is dealt with as swiftly as possible."
	Does that exemplify the attitude of the Blair Government to Members of Parliament and to this House? Do Ministers no longer feel that they have a responsibility to man Departments through the summer recess or to give proper responses to Members of Parliament? If this letter is typical, what is the part-time Leader of the House going to do about it? Does he write to people saying, "I'm not around, so you shouldn't expect a reply"? I hope to be told that this was a regrettable slip and that it will not happen any more.
	Has the part-time Leader of the House seen early-day motion 1700, entitled "Portcullis pension scheme and rights of staff"?
	[That this House welcomes the introduction of the Portcullis pension plan, particularly for those on the staff of honourable Members who do not have existing pension arrangements, those in new employment, and those who have established that it offers better provision than their existing arrangements; but does not wish the staff of honourable Members to be compelled to join the scheme if they assess that it is likely to be inferior to their existing pension arrangements or is otherwise against their expressed wishes.]
	It has already been signed by several Members—unusually, and significantly, of all parties—and it raises a number of important issues about our staff's pension rights. I am sure that Members on both sides of the House will have received representations on that, because we are getting ourselves into a serious position.
	Having given the part-time Leader of the House's office notice that I intended to raise the subject, I want to ask the following questions. On what authority are employer contributions to individual pension schemes to be terminated, as is the intention? When were staff—not Members, but staff—properly consulted and informed about what is going to happen to their pensions? What provision is to be made to enable staff who would suffer financial loss from a change of pension provider to remain with their existing scheme? To give two examples, what will happen to someone who has their mortgage guaranteed by their pension or who has paid their fees up front and therefore cannot benefit from the reduction in fees that is claimed to be one of the benefits of the new regime?
	I hope that the part-time Leader of the House will be able to give full and satisfactory answers to those questions. Many Members' staff are very worried and unhappy about the matter. It has been grotesquely mishandled thus far, and I hope that it is not too late to deal with it. At the very least, can implementation be postponed so that the situation can be properly sorted out?

Peter Hain: I welcome the right hon. Gentleman back to the Dispatch Box. As a self-proclaimed technophobe, he boasted that he had never visited a website; when he launched the parliamentary press gallery website, he said that he hoped to get through life without ever doing so. It will be a mercy for the House if we can bring him into the 21st century.

Eric Forth: Not a chance.

Peter Hain: There we have it. That is what makes him such a delightful opponent across the Floor of the House.
	The right hon. Gentleman asked about pre-legislative scrutiny before the next Session. As he knows, the Government have made a virtue of such scrutiny, and more Bills than ever have been subject to it. The practice increases year by year, as it will in the forthcoming Session.
	I am not in a position to give an answer on when the pre-Budget review will take place. The right hon. Gentleman asked whether we would be frustrated in meeting the deadline of the Queen's Speech and whether legislation would complete its passage through the House of Lords by Prorogation. I am sure that the Lords will not wish to frustrate the will of the elected House and that both Houses will hold a genuine dialogue. We shall carefully consider any amendments, arguments and expertise. However, we are confident that we can complete our legislative programme in time for Prorogation before the Queen's Speech.
	Given that the right hon. Gentleman is an outstanding parliamentarian, I hope that he gave the Minister for Employment Relations, Competition and Consumers notice of the matter that he raised. The episode happened in the middle of a difficult time for my hon. Friend, when his mother died. The right hon. Gentleman should not draw conclusions from the individual letter and case about the general pattern of Government.
	The right hon. Gentleman properly raised the concerns that have been expressed about Members' pensions. [Hon. Members: "Staff pensions."] I apologise: I mean staff pensions. [Interruption.]

Mr. Speaker: Order. Some conversations are taking place in the Chamber. Staff pensions are important to me, too, and I want to hear what the Leader of the House has to say on the matter.

Peter Hain: The right hon. Gentleman raised important points, which I shall note. I have offered to meet the trade unions and anyone else who has concerns, which I shall happily take up. However, I believe that some mischief has been made about the matter. Nobody will be forced to join the new scheme if they can demonstrate that they will be disadvantaged. People need to fill in a form to obtain proper information from their pension provider. There will be no question of a financial loss—that is not the purpose of the new scheme. Its purpose is to modernise pension arrangements and provide a more secure, better scheme for staff. If there are any concerns, we want to deal with them. I am grateful to the right hon. Gentleman for drawing them to the House's attention.

Paul Tyler: May I strongly endorse on behalf of my hon. Friends the expression of concern in early-day motion 1700 on the pension scheme and the rights of staff? Whatever the Leader of the House has been briefed to say, I must tell him that staff believe that they have not been properly consulted. Unless there is some delay to enable that consultation—especially with the Secretaries and Assistants Council—to take place and an opportunity for staff to make representations, they will feel railroaded. It is a blot on the reputation of the House as an employer that consultation has not yet taken place.
	What contingency plans has the Leader of House to ensure that the House receives an early statement on the outcome of the Hutton inquiry? I hope that he has carefully examined the comments that Dr. Hans Blix made yesterday and on the "Today" programme this morning. Is it not clear that we will need a statement from the Attorney-General on the adequacy of the advice that he gave the Government on the legality of going to war in Iraq? We need to know especially whether the Attorney-General was aware of the fragility of the 45-minute claim and whether he knew that the armaments mentioned were battlefield weapons that posed no threat to the United Kingdom or to British forces stationed in Cyprus. That is crucial.
	The evidence that Dr. Hans Blix has presented blows to smithereens both the September and February dossiers. I hope that the Leader of the House acknowledges that it requires a separate statement from the Attorney-General, distinct from one on the Hutton inquiry. When does the Leader of the House expect hon. Members to be properly informed on those matters?

Peter Hain: First, as the hon. Gentleman knows, staff pensions are a matter for the Speaker's Advisory Panel. The purpose of the change is to give staff a better pension. If individual members of staff have concerns, I am sure that the authorities will want to resolve them in favour of the staff. As I said earlier, my door is open. I believe, however, that this issue has been brought to the attention of the House in a manner that is out of proportion to the actuality on the ground.
	The hon. Gentleman asked about the outcome of the Hutton inquiry. As I have said, I am sure that there will be a statement and, I hope, a debate on that issue. However, his remarks about Hans Blix sounded rather like an old gramophone record, and were full of puffed-up indignation. As he knows, the Intelligence and Security Committee concluded that the evidence provided to the Government and to the requisite authorities on the basis of which the dossier was drawn up had been properly dealt with, properly processed and properly interpreted. I prefer to listen to the evidence of the Intelligence and Security Committee than to Hans Blix, who was pronouncing on another matter entirely.

George Howarth: The House will have noted that, in a speech to the Press Gallery earlier this week, my right hon. Friend the Leader of the House ruled out any review of the new sittings arrangements for the House for the lifetime of this Parliament. Will he accept, however, that a large number of Members feel that there is considerable scope for adjustment of those hours, including some of the Members who voted for them? Given that there is a powerful case building up for changes to be made, does he not think it unwise to rule out any adjustment whatever?

Peter Hain: The House made a decision, rightly or wrongly, in October last year, to change the hours of its sittings. That was a decision taken for the rest of this Parliament, to be subject to review after proper assessment had been made of it. We are only a few months into it, frankly, and an early-day motion condemning it had already appeared within 14 working days of the change being made. We should take this matter stage by stage, and review it, but I am open to considering adjustments. For example, I think that there is a strong case for changing the sitting hours of Standing Committees; they probably sit too early. It is within the power of a Standing Committees to alter its hours, if they are putting pressure on—

Patrick McLoughlin: Ministers.

Peter Hain: Actually, that is not the point. Ministers get up very early, and are on duty very early, as it is. The serious issue that has been brought to my attention by many Members on both sides of the House and by members of the Speaker's Panel is that officials of the House are perhaps having to prepare earlier than we would want them to. So if there is a question of starting Standing Committee sittings later, I am sure that we can make such adjustments. The terms of the motion passed on the fundamental hours changes, however, were that they should remain until the end of this Parliament, and I intend to respect that decision.

Andrew Mitchell: Given that the Leader of the House is already developing a reputation for listening carefully to what is said in this place, will he think further about the comments that have just been made by the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) and bear in mind the fact that many of us, on both sides of the House, think that to wait through a whole Parliament before reviewing these matters could be a mistake? We are already aware of the unintended consequences of the changes to the hours. Will the right hon. Gentleman therefore keep an open mind about the possibility of revisiting the matter before the end of this Parliament?

Peter Hain: As I told my hon. Friend the Member for Knowsley, North and Sefton, East—I am happy to repeat the point to the hon. Gentleman, whose views on this matter I respect—the fundamental principles of the hours change were decided for the rest of this Parliament. However, anomalies might appear as we go along, and adjustments might seem sensible—indeed, I have suggested one myself. I have been listening hard to that point, and I think that there is a lot of sense in it. Standing Committees have the right to vary their hours, and to start later and run later if that is what they wish to do. If there are any other practical changes that we could consider, I would be very happy to do so, but the fundamental principle was decided for the rest of this Parliament.

Gordon Prentice: We now have a Standing Committee on Regional Affairs, which is meeting after a gap of about 25 years. Given the Government's commitment to regionalism, would it not be a good idea to set up a Standing Committee for each of the eight English standard regions? We could meet to discuss regional affairs here at Westminster, but we could also travel to our own regions and discuss them there.

Peter Hain: I know that that has been suggested, and we can keep it under review. I should like to see how the newly established Regional Affairs Committee works before we decide whether any such modifications are needed.

Andrew MacKay: The Leader of the House will know that, very courageously, the hon. Member for Vauxhall (Kate Hoey) recently undertook an undercover tour of Zimbabwe. Her report, which has been widely circulated, shows that the situation there is deteriorating hugely under the dreadful Mugabe regime. The right hon. Gentleman has responded to me sympathetically in the past. Is it not about time we had a statement or a debate on Zimbabwe, preferably before the Commonwealth conference that will take place in Nigeria later this year?

Peter Hain: I strongly agree that the Mugabe regime is dreadful beyond words, and is destroying a beautiful country along with, sadly, many of its people. My hon. Friend's report makes salutary reading for those who have found it possible to turn their backs on, or their eyes away from, the appalling way in which Mugabe is destroying his country. I will certainly draw the right hon. Gentleman's request to the attention of the Foreign Secretary and the Minister responsible for African affairs, because there is undoubtedly great concern in the House about what is happening in Zimbabwe.

Gwyneth Dunwoody: Will my right hon. Friend tell us how much the House is having to pay for the recall of Parliament at the beginning of September? What has been the total increase in staff costs, and what has been the cost of the interruption of maintenance contracts? Before pushing out of court any assumption that we should look hard at the changed rules on the hours, will my right hon. Friend understand that even after altering the times of their sittings Select Committees are finding it increasingly difficult to operate effectively? If Standing Committees altered their sitting times, Committee members would find it almost impossible to be in the Chamber at question time. There are now too many incursions into MPs' working time, and there is a bogus assumption of improvisation. It will not do.

Peter Hain: I very much value my hon. Friend's counsel and her views, and have done so for many years; but her point about Standing Committees having to sit at times that clash with Question Time does not follow, as Standing Committees can vary their hours in order to sit at times when there is no clash, even given a later start.
	One of my duties, which I take very seriously, is to uphold the will of the House. Whether people disagree with it or not, the House voted for a change in the hours for the rest of this Parliament, and I do not think we can keep chopping and changing every few months. As I have said, however, I am open to suggestions about modification of the hours and other arrangements.
	I will certainly try to find the figures relating to the cost of our return in September. They are not at my fingertips, but I will write to my hon. Friend when I have them.

Christopher Chope: What is the purpose of our sitting in September if the Government will not answer questions tabled for written answer on a priority basis on a named day during this period? I have tabled a number of such questions, including questions about the costs of policing the Labour party conference in Bournemouth and about the ravages of sudden oak death disease. Although that disease is apparently so important that it has attracted 80 Government inspectors who are going around gardens in England and Wales carrying out inspections, apparently the Government have no time to answer ordinary parliamentary questions about it. There is also the important question of whether the Secretary of State for Education and Skills will go to Bournemouth university and meet students to discuss top-up fees. Why can we not get answers to such questions during this important period?

Peter Hain: That was a good try. [Hon. Members: "Answer."] I am about to do so.
	The hon. Gentleman should note that there was no demand for the House to be recalled over the summer recess. Why? Because everyone knew that we were coming back at the earliest opportunity in September. Year after year, however, there have been almost ritual demands for a recall.
	Regular statements have been made to the House by Ministers over these two weeks. Indeed, one will follow business questions. Ministers have been here to answer questions from the hon. Gentleman and any other Members who might wish to table them.
	The public do not understand how we can be in recess for 13 weeks, as happened with the old model. This time we have been in recess for seven weeks. I should have thought that would be enough even for the hon. Gentleman.

Gerald Kaufman: Will my right hon. Friend give us an early opportunity to debate the need for Ministers to reply to letters from Members within a reasonable time? Will he, in particular, look into what happened to the letter I wrote on 12 June to the Secretary of State for Environment, Food and Rural Affairs about my constituent Mrs. N. Bromley? I have written twice to the Prime Minister about the case, and have tabled a question which is being tossed around between the Department for Environment, Food and Rural Affairs, the Department of Health and the Food Standards Agency. After more than three months, I have still not received a reply.

Peter Hain: I am very conscious that my right hon. Friend would not have raised the matter in such a way had it not been of deep concern to him. I am sure that the Secretary of State for Environment, Food and Rural Affairs will wish to respond as soon as she can.

John Bercow: May we please have an urgent debate in Government time on intended new housing development in the south-east? Given that, on the back of the Milton Keynes-south midlands study, the Government want another 59,000 houses to be built around Aylesbury Vale between now and 2031, but have not even begun to think about how, when and by whom the necessary accompanying infrastructure can be provided, does the right hon. Gentleman not recognise that a debate would provide a real opportunity for the airing of concerns about air pollution, traffic congestion, pressure on the health service and the implications for school places—all of which are matters of the most momentous significance to my Buckingham constituents?

Peter Hain: The hon. Gentleman has plenty of opportunities to apply for debates enabling him to raise matters affecting his constituents, but I will certainly draw his remarks to the attention of the Secretary of State.
	The hon. Gentleman mentioned the health service, pollution, transport and a lot of other matters. The Government are investing more than ever before in all those "quality of life" issues and are dealing with them—by contrast with our predecessors, who cut and cut and cut, and made life intolerable for the hon. Gentleman's constituents, among others.

Lorna Fitzsimons: As my right hon. Friend will know, we are approaching the party conference season. Is he aware that the Electoral Commission is conducting an inquiry into party funding? Will he allow a debate, as soon as possible after its report, on an issue that is important to all members of all parties?

Peter Hain: I will certainly wish to do that, because as my hon. Friend says, the issue is important.
	It is often wrongly assumed that this is some new development, but public funding for political parties is a well established part of our structure, particularly in the House. For example, funding for the Conservative party has trebled from £1.1 million to £3.3 million: that is the extent of its support in the House. The chairman of the Conservative party attacks the principle of public funding, but last year the Conservatives received £200,000 more from taxation—from public funds—than they were able to raise on their own.

Pete Wishart: When someone of the standing of Hans Blix says that the Government's belief in the existence of weapons of mass destruction in Iraq is akin to the mediaeval belief in witches, is it not time for an early debate on these elusive weapons, and on all the issues involved in the construction of what now appears to be a fantastic fable—that dodgy dossier?

Peter Hain: When do we hear from the hon. Gentleman about the heinous crimes that Saddam Hussein committed against his people? Saddam is the only person whom I can think of in history—certainly in modern times—who killed 1 million Muslims. Indeed, at Halabja we are uncovering almost daily the unmarked graves of the 300,000 of his own citizens whom he killed during the Iran-Iraq war. The hon. Gentleman should be supporting the work of British soldiers in liberating the people of Iraq, instead of continually attacking the Government.

Dennis Skinner: May we have an early statement on the private treatment centres that will spring up in all parts of England? I think that Scotland is excluded because it turned them down. Is my right hon. Friend aware that nurses recruited to those centres will almost undoubtedly be poached from neighbouring national health service hospitals? What guarantees will exist to ensure that that does not happen, and will he also ensure that the unions involved in NHS hospitals are properly consulted before any of these centres are established?

Peter Hain: My right hon. Friend the Secretary of State for Health has addressed these issues in the clearest possible terms. There is absolutely no question of poaching or of riding roughshod over local health service organisation provision; indeed, the entire initiative has been developed in consultation with, and by agreement with, local health authorities. I would have thought that my hon. Friend, who is a doughty fighter for the NHS and for people's rights, would welcome the fact that through these projects and initiatives, the Government are massively increasing capacity to enable urgent treatment for our constituents, some of whom desperately need hip operations, for example. NHS patients will receive that additional capacity free at the point of treatment—a vital principle that the Conservatives plan to demolish through charges, privatisation and private health insurance.

Patrick McLoughlin: Before the recess, the Secretary of State for Environment, Food and Rural Affairs made a statement on the outcome of the common agricultural policy, and I requested then that we be able to debate the impact on many of our constituencies of that important outcome. Will the Leader of the House agree to that debate?

Peter Hain: I shall certainly draw the hon. Gentleman's request to the Secretary of State's attention.

Brian Iddon: I begin by declaring an interest, in that I am the patron of the Society of Registration Officers in England and Wales. The civil registration service has hardly changed since the 1830s, but it is just about to undergo a mini revolution as a result of the document published at the beginning of the summer entitled "Civil Registration: Delivering Vital Change". I understand that that mini revolution will be launched via a regulatory reform order, which will probably be discussed Upstairs, rather than on the Floor of the House. Does my right hon. Friend agree that, as this matter affects the lives of all of our constituents, such a debate should take place on the Floor of the House?

Peter Hain: I congratulate my hon. Friend on his work on behalf of civil registrars; he performs a very important role. As an enthusiastic supporter of this initiative, he will know that the Government are modernising the entire process to make it in tune with people's lives today. I shall certainly bear his request in mind.

Julian Lewis: May we have a statement from the Home Secretary, or perhaps one of the Law Officers, on the policing and judicial practice applied in the case of Mr. James Dowell, who found 15 youngsters vandalising his pond, and managed to detain three of them and force them to clear up the mess? He was subsequently arrested by no fewer than eight police officers for false imprisonment, received a sentence of 80 hours community service, and has been tagged for the next four months to make sure that he does not do it to them again. Would it not be good to get back to the time when the letters "PC" meant police constable, not political correctness?

Peter Hain: I am obviously baffled by that case, but I shall certainly ensure that the Home Secretary knows about it. At least the citizen concerned was not sentenced to attend the proceedings of the Conservative party.

David Winnick: Can my right hon. Friend confirm that when the Hunting Bill is significantly changed in the Lords, as it undoubtedly will be, the Parliament Act will definitely be used, so that we can have a ban on fox hunting in the lifetime of this Parliament? Is it not essential that the will of the elected House triumphs over a totally unrepresentative House of Lords, in which 92 hereditaries remain—for the time being?

Peter Hain: My right hon. Friend the Minister for Rural Affairs and Local Environmental Quality made clear on 21 March last year the Government's policy on the Parliament Act, and it has not changed. This House voted overwhelmingly for a ban on cruelty to animals, which the House of Lords will, I am sure, wish to respect. I am sure that matters will proceed and that we can reach a consensual outcome. My right hon. Friend has made the Government's position clear, and we stand by it.

Nigel Dodds: The Leader of the House will be aware of my constituents' great concern about continuing donations to IRA-Sinn Fein from America, a recent example of which was a donation by the Coca-Cola corporation. At the time of that donation, Mr. David Hill—who has been appointed as successor to Mr. Alastair Campbell at No. 10—worked for a public relations company, one of whose clients was the Coca-Cola corporation. May we have a statement to clarify the Government's position, whether the Prime Minister was aware of and approved of the current situation, and whether he agrees that donations to IRA-Sinn Fein by companies here or elsewhere are totally unacceptable, given its ongoing commitment to violence and its refusal to give up the machinery of terrorism in Northern Ireland?

Peter Hain: I am sure that the Secretary of State for Northern Ireland will wish to take note of the hon. Gentleman's question.

Tony Wright: As my right hon. Friend rightly said, last week's Intelligence and Security Committee report nailed the lie that the Government had in some way doctored intelligence assessments. I refer him to a very important section of the report, which referred to a Joint Intelligence Committee assessment that was made in February, in the run-up to the war. It said that there was no intelligence-assessed link between the Iraqi regime and al-Qaeda and terrorism, and that the collapse of that regime would heighten the terrorist risk to us. Do the Government intend, in the spirit of publishing dossiers, to publish that assessment, and will he give the House an opportunity to discuss it?

Peter Hain: Both the Prime Minister and the Foreign Secretary have dealt with this matter. The Government have never maintained that Iraq was involved with al-Qaeda in respect of the 11 September terrorist attack. However, we have always said that there was always a danger—we are beginning to see this happen—that Saddam Hussein's monstrous regime would link up with terrorists—[Interruption.] Of course, there was bound to be a danger that when the regime collapsed, different forces would seek to interpose themselves, as they have predictably done. But the real issue before the House was whether to leave Saddam in power, with his monstrous tyranny and ability to threaten the rest of the region and the rest of the world. We are proud that we did not duck that choice, and as a result Iraq and the rest of the world will be a better place in the months and years to come.

Peter Luff: May we have an early debate on today's report on gangmasters from the Environment, Food and Rural Affairs Committee? If time cannot be found for such a debate, could the Leader of the House at least ask the Secretary of State to respond urgently to that report? He will be aware that gangmasters provide crucial casual labour to growers and producers throughout the United Kingdom, but that many of them are ruthless and are guilty of the grossest exploitation. Moreover, much Treasury revenue is lost and people are often put at risk, as I myself know from a tragic railway accident of 7 July. The report is hard-hitting and makes clear recommendations, on which the Government need to act.

Peter Hain: The hon. Gentleman raises a very important matter, of which he has particular knowledge. I am sure that the Ministers concerned will want to act urgently on that report, and I shall certainly ensure that his question is drawn to their urgent attention.

Louise Ellman: Would the Leader of House consider having a debate on Royal Mail's intention to close down its air freight service at the Liverpool John Lennon airport on the grounds of an assessment based on faulty financial information? Is there a case for a general discussion of how public interest companies interpret their commercial freedom in relation to Government policy?

Peter Hain: I think that we had a debate on those matters shortly before the recess, but my hon. Friend raises an important issue, which will no doubt be of concern to her constituents. I will ensure that the appropriate Minister—and, indeed, Royal Mail—is made aware of her question.

John Thurso: In the light of the motion carried in the Scottish Parliament on the detention of children at Dungavel and the deep concern expressed by members of the church and nation committee of the Church of Scotland, will the Leader of the House consider providing us with an opportunity to debate the matter as soon as practically possible? Is he aware that hon. Members on both sides of the House regard the detention of children as the unacceptable face of Scotland in the 21st century?

Peter Hain: As the hon. Gentleman may know, that serious matter of great concern has been raised in Scottish questions. I am sure that the appropriate Ministers will note with great seriousness the hon. Gentleman's question.

Gisela Stuart: I welcome last week's announcement that, as part of the White Paper discussions on the draft constitution, the Special Standing Committee will continue to meet during the intergovernmental conference debates. However, should the draft be accepted as it stands, given that some provisions have significant implications for the workings of Parliament? Will the Leader of the House find time in the coming months for a debate on the Floor of the House on the specific provisions that affect the workings of Parliament?

Peter Hain: I am sure that that will be necessary at some point. I am in communication with the Chairman of the European Scrutiny Committee and others who are considering these matters. I think that my hon. Friend refers to the important advance for democracy represented by the new draft constitution, according to which national Parliaments, including our own House of Commons, will have the ability to vet any new proposals from the European Commission to assess whether they should be considered at the Brussels level or remain at the nation state level. That is an important step forward for democratic accountability between Europe and its member states. My hon. Friend played an important part in achieving it, but implementation in the House is ultimately a matter for the House.

Keith Simpson: May I draw the Leader of the House's attention back to the points made by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) and others about pension provisions for our staff? He gave the impression that the concerns have somehow been exaggerated or put up, but I suggest that that is entirely erroneous. Many members of our staff are very worried.
	The Leader of the House gave the impression that his door is always open, but he needs to be more proactive than that. We will be away for about three weeks and I suggest that he calls a meeting, perhaps with the director of finance and others, as soon as possible to clear up any of our staff's misunderstandings and to give them some guarantee about their future and their pensions.

Peter Hain: I am sure that the hon. Gentleman is not suggesting that I sought merely to dismiss the concerns. On the contrary, those concerns—I have heard about some of them—are legitimate. The Speaker's Advisory Panel discussed the matter last week and is well seized of the importance of ensuring that everything proceeds smoothly and that staff's concerns are listened to. I shall obviously keep a beady eye on that process on behalf of the House, and I shall report back or answer further questions in the future when the opportunity arises. I am grateful to the hon. Gentleman for raising the matter again.

Llew Smith: I am sure that the Leader of the House will join me in welcoming the outcome of the referendum in Sweden a few days ago, and I am sure that he, like myself, would want to ensure that, if the UK has a referendum on the euro, the UK electorate are as well informed as the Swedish people. Could we therefore have a debate not only on the single currency, but specifically on article 107? If it became law, it would become illegal for Parliament, the Assembly or local authorities to influence the decision makers, who are neither elected nor accountable, but merely a group of bankers.

Peter Hain: The Swedish referendum on the euro was a matter for Swedes and the British referendum, if and when it comes, is a matter for Britons. We will do things in our own way according to the route map laid out by the Chancellor on 9 June, which will see increasing convergence between the British and eurozone economies. If, at the end of that process, the economic circumstances have fallen into place, we will indeed call a referendum and I am sure that we will win it.

George Osborne: That route map set out by the Chancellor included a roadshow. I cannot believe that the Leader of the House, as one of the Government's leading euro enthusiasts, has not been invited to take part, so can he tell us how many events he has participated in since the roadshow was launched? That would scotch rumours that the roadshow does not exist.

Peter Hain: The Treasury has already done 55 presentations around the country on the euro. I myself chaired—[Interruption.] Well, I was asked a question, and I am about to give the answer. I chaired a meeting of the Wales euro preparation committee in July—[Interruption.] Indeed, and I am going to chair another meeting of that committee next week. The truth is that this is a matter of live debate. The Treasury is consulting extensively around the country. In the end, Opposition Members can laugh and jeer, but their policy is to deprive the British people of the opportunity to vote on joining the euro, even if it is in our economic interest or the interest of our jobs and prosperity to do so. They all say "no"—never, ever—dogmatically and on principle. That is not a common-sense position. Ours is the sensible position: to prepare and decide when the economic circumstances are correct.

Tom Harris: May I draw my right hon. Friend's attention to the New Testament, specifically to Luke, chapter 15, verse 7:
	"I say unto you, that likewise joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons, which need no repentance."?
	As someone who voted in favour of the reforms to the sitting hours of the House, I have had more than enough time to repent and reflect on my mistake. I heard what my right hon. Friend said about the decision of House applying for the rest of this Parliament, but the House has the right to change its mind. Many hon. Members on both sides of the House would, given the opportunity, seek to redress the damage. When will I have an opportunity to atone for my sin?

Peter Hain: There are sinners and saints on both sides of the argument. I shall repeat a reply that I gave earlier: if my hon. Friend has any specific suggestions about adjusting or improving the position, my door is open. That is how to move forward, but I repeat that the House took a decision for the rest of this Parliament. Such decisions should not be lightly swept aside. They should be respected and it is my duty to respect them.

Andrew George: Can the Leader of the House give an assurance that we shall have an adequate opportunity properly to scrutinise regulations as they go through the House? I refer to the Animal By-Products Regulations 2003, which my right hon. Friends and I prayed against on 9 June this year and was debated in Committee this Monday. The Minister said that the
	"40-day period has passed so annulment is not possible."—[Official Report, Third Standing Committee on Delegated Legislation, 15 September 2003; c. 14.]
	I protested to the Chairman at the time that it is not within my gift to determine the date when these matters are debated. This is either an example of incompetence by the Government's business managers, or a cynical method of trying to manipulate the procedures of the House to avoid proper scrutiny. Can the Leader of the House give an assurance that we shall have timely and proper scrutiny of regulations as they pass through the House?

Peter Hain: It is neither cynical—who would ever accuse business managers of being cynical—nor incompetent. I will look into the matter and I will write to the hon. Gentleman, but I reject the suggestion of ulterior motives that he ascribes to the episode.

David Chaytor: I draw my right hon. Friend's attention to the third report of the Health Committee, which was published earlier this summer, on the subject of sexual health. The report begins with a significant quotation from Dr. Helen Lacey, who is the consultant in charge of the sexual health clinic at Fairfield hospital in my constituency. She is concerned about the current crisis in sexual health and she tells me that my constituency has seen a 300 per cent. increase in the occurrence of certain sexually transmitted infections in the past four years. The burden of that increase often falls on vulnerable young women and is frequently caused by the reluctance of young people, parents and teachers to discuss those issues, so does my right hon. Friend agree that this House could set an example by holding a debate on the Committee's report at the earliest opportunity?

Peter Hain: That is an important issue and I will look into my hon. Friend's request. I know of the fine work that is done in his constituency. We are all concerned about the matter, and I am grateful that he has raised it.

Constitutional Reforms

Christopher Leslie: With permission, I wish to repeat a statement made in the other place today by my noble Friend Lord Falconer of Thoroton about further reforms to the House of Lords, and on the office of Lord Chancellor.
	The Government are today publishing two consultation papers on the next steps on House of Lords reform; and on the functions of the Lord Chancellor. Copies of both papers are available in the Vote Office. The papers form another significant part of the present phase of constitutional reform on which the Government embarked last summer, with the creation of a Department for Constitutional Affairs to take overall responsibility for the issues.
	May I begin by apologising to the House because a report of the proposals appeared in a Sunday newspaper? I can assure the House that no one in my Department was authorised to speak to the press on the subject. It has always been the Government's intention to ensure that Parliament should hear first about the proposals.
	I shall deal first with our proposals for further reform of the House of Lords. Last February, both Houses voted on the range of options for the composition of the second Chamber proposed by the Joint Committee on House of Lords Reform. Their lordships voted three to one in favour of an appointed House. In this House, there was no majority for any of the options. The Joint Committee, in its second report published on 9 May, reflected on the outcome of the parliamentary votes and concluded that
	"simply to maintain the status quo"
	in respect of composition was undesirable. The Government agree.
	In those circumstances, we intend to make progress where we can. The Government therefore propose further reforms to ensure that we have a stable and sustainable House of Lords. It was never our intention that the remaining hereditary peers should remain members of the House of Lords for ever. When the interim arrangement was reached, as well as the immediate benefit of the agreement, we accepted the argument that the presence of the remaining hereditary peers would act as an incentive to further reform. That has not happened: there is no clear consensus in Parliament on the way forward. So the context for reform has clearly and significantly changed. The circumstances that gave rise to the original arrangement over the remaining hereditary peers no longer apply. The solution, which the remaining hereditary peers were there to help seek, is no longer available. The Government must act, and act decisively, to bring about stability and sustainability.
	It is for the Government to act, but it is for Parliament to decide. It will be for Parliament as a whole to decide on the removal of the right of the remaining hereditary peers to sit and to vote. Therefore, the next step of our reform programme will be to introduce legislation, when parliamentary time allows, to remove the right of the remaining 92 hereditary peers to sit and vote in the House of Lords, thus completing that element of the reform process on which we embarked in 1997.
	In moving on from the current arrangement, the Government wish to pay tribute to the contribution that those 92 peers make to the other place. Many of them are among its most active and effective members. The Government hope that Parliament might continue to benefit from the contribution of at least some of them should they be nominated as life peers in the future.
	We shall set up a statutory commission to select and oversee appointments that are made to the House of Lords. It will build on the present non-statutory Appointments Commission, which itself represented a significant voluntary relinquishing by the Prime Minister of his powers of patronage. The statutory commission will be appointed by Her Majesty the Queen in response to an address from Parliament. The three major parties in this House and the Cross-Bench peers will be directly represented on it, together with a number of members selected in accordance with the principles of the Commissioner for Public Appointments in an open selection process. The Government will discuss with the Opposition parties how they might best be involved in the selection process. The Commission's funding and accountability arrangements will maximise its independence from the Government. The consultation document asks for views on various detailed aspects of those arrangements.
	We propose that the functions of the commission will be threefold. First, it will decide on the number and timing of new appointments to the House of Lords. This will be a massive—and voluntary—diminution in the Prime Minister's influence over the membership of the Second Chamber. In making its decisions in relation to political appointments, the commission would be subject to two main guidelines. They are that the Government of the day should not have an overall majority in the Lords; and that appointments for the parties should have regard to the outcome of the previous general election. The commission will also be expected to provide that appointments to the Cross Benches should average 20 per cent. of appointments over the lifetime of a Parliament. The Commission's second function would be to nominate the non-party peers, and thirdly, it would vet the nominations for party peers for propriety.
	In the meantime, the existing non-statutory Appointments Commission will continue its work, of which the Prime Minister has already expressed the Government's appreciation. The Prime Minister will invite it to make recommendations for new non-party peers until the new statutory commission is in place.
	We also propose to bring the rules for disqualification from membership of the House of Lords, in respect of detention following conviction for an offence, into line with those for the House of Commons. We do not believe that the difference of treatment can any longer be justified. We therefore propose that in the future such peers will forfeit their membership of the House of Lords exactly as they would if they were MPs. In addition, they will be deprived of their peerage. The provision will have retrospective effect. Parliament is a privilege, not a possession. Such peers will, of course, be free to seek renewed membership of the second Chamber, by applying to the Appointments Commission or their party, as relevant, for nomination, just as former MPs can seek re-election.
	We propose that life peers, like hereditary peers before them, should in future be able to resign their peerages and membership of the House of Lords. That is a fairer and more reasonable arrangement that will allow those who feel they wish to move on and no longer sit in the second Chamber the opportunity to do so.
	Nothing in the proposals relates to the powers of the House of Lords. We are not proposing any extension of the role of the second Chamber. For example, the traditional role of the Lords in relation to Finance Bills is clear and works well, its powers being constrained by the Parliament Act 1911 and Commons financial privilege established by resolutions in the 17th century. I am sure their lordships would not seek to extend their powers, for example in respect of Supply. The House of Commons should and must remain pre-eminent in our constitutional arrangements.
	On further reform of the House of Lords, we will continue to look for a way forward. We will discuss any possible next steps with the current Joint Committee and how it can contribute.
	Taken together, the changes amount to a substantial set of reforms to the House of Lords. When added to our previously announced decisions to set up a separate supreme court, and to remove the office of Lord Chancellor, thus leading to reform of the office of Speaker, they will create a House that is significantly different from that which currently exists.
	The Government are also publishing today a consultation paper on the reform of the office of Lord Chancellor. Work to bring to an end the multiple roles of the Lord Chancellor is already well advanced. The Secretary of State is formally inviting views on the Lord Chancellor's ecclesiastical patronage, his visitatorial responsibilities and other functions relating to specific charities, schools and other institutions.
	The proposals the Government announce today are part of the programme of constitutional reforms that we have been pursuing since 1997. They will contribute to the further strengthening of Parliament. Alongside our earlier reforms of devolution to Scotland and Wales, the Human Rights Act 1998 and freedom of information, they will take their place in the shaping of our nation, to make the institutions of the state fit and responsive to the demands of our citizens in the modern world.

William Cash: I thank the Minister for making that statement, but I regret that it comes a week after its content appeared in The Sunday Times. That blatantly contravenes your continual rulings, Mr. Speaker, that Parliament should be told first. Indeed, I received my advance copy at only 11.45 this morning, and I had to ask for it. That is no way for a so-called Department for Constitutional Affairs to conduct its business. It began its life floundering in a farce and now treats the House with contempt. Anyone would think that the constitution of this country was the personal chattel of the Prime Minister and his cronies.
	The statement reeks of dishonesty. It pretends that the Government are still seeking long-term reform and, in the words of the Secretary of State in his foreword, are looking to
	"shape a consensus to make the second chamber more legitimate and more representative of our society."
	In fact, they are engaged in short-term political gerrymandering and cynical political arithmetic. No one believes what the Government say anymore. The more people see, the less credible the Government become.
	The Government are not interested in delivering genuine reform. They have ignored the royal commission and pre-empted the Joint Committee of both Houses. It appears that the Joint Committee was not even consulted. The future of hereditary peers is not the issue. That was dealt with by Act of Parliament in 1999. No one has the right to sit in the House of Lords by virtue of hereditary peerage alone. It is absurd for the Secretary of State to call for consensus in his foreword to the consultation paper, when the Minister in his statement just now stated that there was "clearly no consensus" in Parliament.
	The fundamental question facing Parliament is indeed the future of the House of Lords, its authority and the authority of the House as a whole. The Government's objective in the Labour party submission was intended to ensure that the House of Lords remains a
	"distinctive, representative and independent chamber".
	That is not what this consultation paper is about. No legislation can be introduced affecting the other place without opening questions that go further than the framework of that Bill. In this House we will face a choice.
	The issue is the accountability of the Government to Parliament, and whether the Prime Minister will gain further control over the constitution, adding to his disgraceful refusal to give the British people a referendum on the European constitution. The Minister and the Secretary of State in the other place have said that Parliament must decide about the measures before it. We need to know from the Minister whether the Government will give the House of Commons a free vote on the Bill that they propose to introduce following this statement, and whether they will come clean on whether their real intention is to remove enough peers who would take the Government to the Parliament Act on an amendment for a referendum on the European constitution. That is the arithmetic.
	After all, the Prime Minister has said that, for him, the European constitution is even more important than Iraq. This is a political statement, made by one party for one party. It is not constitutional reform. Principle has been abandoned. The Cook-Maclennan talks have been betrayed. This is not a step towards democracy but a fundamental shift away from it.
	The Opposition have made our position clear in favour of more democracy and an elected House of Lords. The proposal for 80:20 was lost in the House by a mere three votes. These proposed reforms treat that vote with contempt.
	As regards the other place, its legitimate expectations in 1999—when many of its Members agreed to withdraw, on the basis that 92 hereditary peers would remain under a parliamentary concession and not by hereditary right—have been disgracefully dishonoured.
	Opposition Members do not believe that the Secretary of State for Constitutional Affairs—who deals in so many ways with how we are governed—should be in the other place. He should be in this House, not merely represented in the House of Commons by a junior bag-carrier who will simply do the bidding of the Secretary of State and the Prime Minister.
	Why has the matter suddenly become so important? Most people in the country probably think that the other place works well. Is that not because the other place has shown its independence and won respect and authority, for example over issues such as trial by jury, media ownership, the snoopers charter and the fair conduct of justice?
	Is it perhaps that the Prime Minister wants to remove 20 per cent. of the non-governmental peers? Is the Prime Minister arguing that the proper and legitimate amendments from the other place are regarded as abnormal obstruction of the Government's legislative programme? If so, I challenge the Secretary of State and the Minister to say so.
	The Prime Minister is as dangerous as he is arrogant, and his Secretary of State is implementing this dishonest plan in defiance of principle. It is a cynical move by the Prime Minister, when he is in deep trouble, to draw attention away from his difficulties. The Government treat the issue of constitutional reform and their loss of votes in the other place as though Parliament had no right to interfere in their Bills or their plans. I remind the House that in 40 per cent. of the Divisions that they have lost this year in the other place, less than half of the Government's own peers supported them. The Government simply failed to convince the House. Indeed, the Government have lost 51 Divisions this year—the highest number since the 1970s. However, they would have lost only 10 if the hereditary peers were removed. That is the real reason for the policy.
	What of the statutory appointments commission? We welcome it in principle, but we have heard about it for six years. When precisely will it be enacted? The Government no longer talk of broad parity with the main Opposition party but now only of
	"not having an overall majority in the House".
	Does that not mean that the Government will have a majority over the two main Opposition parties combined?

Dennis Skinner: That is the plan.

William Cash: Indeed, that is the plan. It is the Prime Minister's plan as well.
	As to the reform of the office of the Lord Chancellor, we discussed the matter when the previous statement was made, and we will debate it in future. However, one thing is clear. As the consultation paper states,
	"the Lord Chancellor is after the Prime Minister the principle source of Ministerial advice to the Queen."
	He serves the same function in respect of the Cabinet on all matters of constitutional importance. The removal of the office of the Lord Chancellor removes from the Cabinet historical and constitutional weight and authority when it comes to advice on constitutional affairs and maintaining the independence of the judiciary. The office has a degree of independence that the Prime Minister clearly finds impossible to reconcile with his obsession with his own power and control.
	This Government have lost credibility. The Prime Minister does not want a democratic House of Lords but an appointed House of Lords that he can ignore. He dare not say so, but that is what these proposals mean. Constitutional reform should be in the long-term national interest, not what these proposals represent—a short-term fix. We shall oppose them for the shoddy manoeuvre that they represent.

Christopher Leslie: It is now clear that the Opposition support keeping hereditary peers in the second Chamber. That is disgraceful, and does no credit to the House of Lords. It is about time that we took steps to remove the remaining 92 peers who are there by virtue of their birth, and that is exactly what we intend to do.
	Clearly, we have to respond to the situation caused by the votes in February, when no consensus emerged from Parliament. The Conservative majority in the other place voted by three to one in favour of an appointed second Chamber. No consensus emerged in the House of Commons. We need to move forward, where we can, to put the other place on a stable and sustainable footing. We can do that by removing the hereditaries, because the status quo is not desirable.
	The hon. Gentleman raised a number of specific matters, and I shall investigate the amount of notice that he was given of the statement. It is entirely laudable that my right hon. Friend the Prime Minister should seek to relinquish many of the powers of patronage that his office traditionally has held, in terms of the timing and numbers of appointments to the House of Lords, and in terms of the establishment of a statutory appointments commission. I am glad that the Opposition welcomed that element of the statement, but the hon. Gentleman then said that they will oppose the legislation that we intend to bring forward when parliamentary time allows.
	The hon. Gentleman took all of three minutes to turn the issue into a European conspiracy; he feels that it is all to do with some European constitutional referendum, which reflects interestingly on the current state of the Conservative party. Abolishing the hereditary peerage is the right thing to do. Ensuring that the House of Commons has pre-eminence is the right thing to do. In the face of the lack of consensus, we need to make progress, and that is exactly what the Government will do.

Paul Tyler: The statement and the consultation paper are economical with the truth. The Minister has just said that there was clearly no consensus in Parliament on the way forward. That is only partly true; there is a consensus in this House, although there may not be consensus between the two Houses.
	The Minister has just said that this House must remain pre-eminent. There is a majority in the Chamber for a reformed second Chamber to be elected—[Hon. Members: "No, there isn't."] There is.
	The announcement is a double betrayal. First, it breaks the manifesto promises on which Labour Members were elected on two occasions and, secondly, it tears up the agreement that the hereditary peers would be removed only when the full reform package was in place. Liberal Democrats will thus support the removal of the remaining hereditary peers only when the full package is put before this House, and when it is accompanied by the promised introduction of elected Members to make the second Chamber "more democratic and representative"—words that every Labour Member signed up to.
	The Prime Minister clearly regards the votes of Members of this House as unimportant. On 4 February, the majority of Members of the House—332, or more than half—voted for a majority of Members of the other place to be elected. They did not all go into the same Lobby at once, but that was their view.
	The Minister is not listening to me as his colleagues are whispering to him, but he is an honourable man and he will remember that he supported the Prime Minister and the Lord Chancellor in voting for an all-appointed House. That option was substantially rejected—by 78 votes—so does he still think that the votes of the House of Commons should be pre-eminent? If so, the option that he and his right hon. Friend the Secretary of State are currently proposing directly negates what the House voted for.
	Every Labour Member, at two elections, supported a manifesto commitment to create a more democratic and representative second Chamber. If they vote for the Bill that is being suggested for the next Session, they will both be reneging on that promise to the electorate and deliberately ignoring the votes of this House on 4 February.
	The Minister has just said that he wants stability and sustainability. Pull the other one! There is nothing sustainable about his proposition.
	We now refer to the Department for Constitutional Affairs as "DECAF". It is living up to its name. The real radical reform originally intended by Labour Members and their Government has been sucked out of it and neither House will accept this unpalatable mess.

Christopher Leslie: What interesting mathematics the hon. Gentleman proposes. He says that, supposedly, there is consensus in this Chamber for an elected second Chamber. I do not know which version of Hansard he has been reading, but my tally of the votes suggests that only 272 hon. Members were in favour while 289 were against, which means that the House rejected the option of an elected second Chamber. It is clear that there was no consensus in this House on the way forward.
	In the face of Parliament's decisions, what should the Government do? We need to make progress where we can. For the Liberal Democrats, of all parties, to find themselves in the ridiculous situation of supporting the retention of hereditary peers in the second Chamber is an outrage. I do not understand how they can call themselves Liberal Democrats. We need to abolish the remaining hereditary peers. That is what most ordinary people would demand.
	It is important to underline the fact that the Government are taking steps to fulfil our manifesto commitments. We want a more legitimate and representative second Chamber. We need to move forward where we can. We are also proposing a statutory appointments commission. Those are steps forward. Of course, the door remains open for further reform, but we need to take opportunities, while we can, to remove undesirable elements of the status quo.

Robin Cook: My hon. Friend is a fair-minded man, so he will confirm that all the Government's previous proposals for reform of the Lords involved the abolition of hereditary peers. He will also admit that what distinguishes the package that he has just announced is that it is the first time that the Government have presented proposals for reform that do not include provision for any Member of the second Chamber to be elected by the British public.
	May I warn my hon. Friend against the delusion that an independent commission will make appointments popular? During the two years when I was Leader of the House, we begged the Appointments Commission not to come up with any more names because when it did there was a public relations disaster. Does he understand that the reason for that unpopularity is that the British people find it offensive that they have no say on who sits in a Chamber that is passing laws on them?
	On my hon. Friend's arithmetic, as he is a fair-minded man, will he also accept that the proposal for an all-appointed House got 235 votes and was rejected by 323 votes? That was a somewhat larger majority than I heard him mention a minute ago. Is not it the case that the all-appointed option received the fewest votes in the House and had the biggest majority against it? I confess that I am rather confused, so can my hon. Friend remind me why we consulted the House of Commons if we intended to go ahead with the measure that was least popular among Members of Parliament?

Christopher Leslie: My right hon. Friend was intimately involved in the decisions leading up to the votes last February. Although, as he is aware, no consensus emerged for an all-appointed second Chamber, an all-elected second Chamber or, indeed, any element of election in the second Chamber, it is clear that we must have regard to where we are now and what we can do next. We could leave the hereditaries in the second Chamber in perpetuity or we can take steps to remove that anomaly—that anachronism—and I believe that that is the right thing to do.
	My right hon. Friend is correct to suggest that, at present, we do not propose to make changes in composition. The Government are not saying that this is the final stage of reform, but we must be conscious of the fact that progress has to be made and that is what we want to do. Appointments will need to be a feature for the time being, so the statutory appointments commission is a step towards greater legitimacy for those who sit in the second Chamber. That proposal was in our manifesto and my right hon. Friend was involved in its authorship.

William Hague: I accept that there was no consensus on Lords reform in this Chamber in February, but was that not largely due to the decision of the Prime Minister and some members of the Cabinet to abrogate all their previous commitments for a more democratic upper House? Has not that long-standing Labour commitment formally come to an end today? That commitment had lived on—there was even a commitment to the Wakeham report in the last Labour manifesto—but has not it come to a formal end with the words of the Leader of the House a few days ago that there would be a democratic method of appointment? Will the Minister tell his right hon. Friend that we have a word in the English language for "democratic method of appointment"? It is "elections". In the absence of elections to the upper House, will not we be left with a weaker upper Chamber in a weaker Parliament? In those circumstances, is not it ludicrous to speak of an overall reduction in the influence of the Prime Minister of the day?

Christopher Leslie: The right hon. Gentleman seeks to imply that the result of the vote in February was all the Prime Minister's doing. However, as he knows, there was a free vote. He suggests that we should have an all-elected or partially elected second Chamber. In that case, why did the Conservatives in the other House vote by an overwhelming majority for a fully appointed second Chamber? How does he propose to reach a consensus, to find a result, when members of his party in the other House are voting for appointment? We must have regard to the outcome of those votes and ensure that we can take steps forward. For the Conservatives to suggest that they want an elected element when their colleagues in the other place would prevent that very thing is to look in both directions.

Tony Wright: Is what my hon. Friend now proposes intended as an interim proposal? If so, how long will the interim period be? If it is only an interim proposal, what steps is he taking to put in hand the further reforms that he refers to and what machinery does he intend to invent for that purpose? May I ask him about a specific point? Almost everyone who has commented on Lords reform, from the royal commission onwards, has said that, even if we are just doing some tidying up, one thing that we need to do is to break the link between service in a second legislative chamber and the honours system. Will the proposals that he now offers us break that link?

Christopher Leslie: On the last point that my hon. Friend makes, the consultation document raises the issue of the link between the peerage and membership of the second Chamber, and we feel that that issue would perhaps merit investigation, but not until we find a consensus about composition. Indeed, that is precisely the point of his first question. We feel that it will eventually be possible to find some way through on the question of composition. We cannot say how long that will take, not least because of the muddled results that we had when Parliament voted on this issue. We want to create a stable second Chamber for the time being and to discuss with the Joint Committee the next steps that might lie ahead, and I look forward to those discussions.

George Young: Can the Minister confirm whether a direct consequence of the Bill that he has proposed today is that the Government will find it easier to get contentious legislation through the second Chamber? If that is the case, how could he tell the House in his statement that the proposals will contribute to the further strengthening of Parliament?

Christopher Leslie: The right hon. Gentleman was a Secretary of State in an Administration who had an overall majority in both Houses of Parliament for 18 years, so for the consultation document to say that we no longer feel that it is right for any Government to have an overall majority in the second Chamber is the right way forward. We feel that that is the best way to progress, to ensure that we have balance and a fair system in the second Chamber. This is certainly nothing about ensuring that we have our business pushed through in any different way. The right hon. Gentleman should realise that, if that were the case, we would copy the previous Conservative Administration, but we reject the approach that they enjoyed for such a long time.

Gerald Kaufman: As someone who served on the royal commission for a year, may I congratulate my hon. Friend on a statement that fulfils the Labour party manifesto commitment on the Wakeham report? What my hon. Friend has announced is fulfilment of the spirit and a large part of the letter of the report—namely, the establishment of a statutory appointments commission that is required to take account of the votes cast at the previous general election and the removal of patronage from the Prime Minister, plus the abolition of the 92 hereditaries. It is an extremely sensible statement; the Government deserve credit for it; and it is not in the least surprising that, when the right hon. Member for Richmond, Yorks (Mr. Hague) was rejected at the last election, the Government's commitment in beating him is now being carried out.

Christopher Leslie: May I take this opportunity to pay tribute to my right hon. Friend and, indeed, Opposition Members for their role on the royal commission? He is right to say that we are taking steps to implement our manifesto commitments. Of course, it is a shame that we could not reach consensus in the House of Commons on the question of composition, but it is right to remove the hereditaries from the second Chamber and to establish a statutory appointments commission. How interesting it is to hear the disappointing response from Opposition Members, who will apparently oppose removing the hereditary principle from the second Chamber.

Alan Beith: Why does not the Secretary of State for Constitutional Affairs understand that constitutions—even our unwritten one—have checks and balances, and that, when they are changed, the checks and balances have to be either maintained or replaced? He has already ignored the views of the judges that his proposals provide no means at Cabinet level to assert judicial independence. He now proposes to ignore the views of all the people in the country who have seen the Lords act as a check on an over-powerful Government and do not want the House of Lords to be changed, unless it is changed in a way that maintains that authority and that ability to challenge the Government.

Christopher Leslie: I do not quite know which document the right hon. Gentleman has been reading. The Government wish to see not only a second Chamber with no overall Government majority, but an appointments commission that will determine the timing and number of those appointed in that manner. The document also spells out the fact that the Secretary of State for Constitutional Affairs should have a role in protecting judicial independence. It is not true that the Government somehow want to blur the lines between the different branches of the constitution. Quite the contrary— we seek the proper separation of powers between the judiciary, the Executive and the legislature.

Stuart Bell: May I direct the House's attention to the constitutional reform document in relation to the office of the Lord Chancellor, and say, as Second Church Estates Commissioner, that the Church welcomes the consultation document in relation to ecclesiastical appointments, parochial appointments, the Royal Peculiars and other ecclesiastical functions? The Church welcomes the proposals in relation to a disengagement of the Church from the state, rather than disestablishment, but may I ask the Minister to confirm that what we seek in relation to Church appointments is to give back to the Church what rightly belongs to it and to maintain for the state that which it is appropriate for the state to maintain?

Christopher Leslie: My hon. Friend is right to suggest that the consultation document on the office of the Lord Chancellor contains no proposals on disestablishment, but there are interesting tracts on ecclesiastical patronage, visitatorial rights, the Royal Peculiars and the chapels royal, which I know all hon. Members will want to look at in much more detail. There are questions about whether Ministers or perhaps the Church of England would be best placed to undertake some of those functions, and we will not allow some of those details to go without proper scrutiny and proper attention.

Edward Garnier: May I gently remind the hon. Gentleman that, contrary to what he said at the outset of his answers, there is not a Conservative majority in the other place? Will he tell us what he proposes to do beyond reciting the apology that he gave at the beginning of his statement? Does he intend to look into how that statement came to be published in the newspapers some days ago? Has he considered whether the element of retrospection is complicit with the European Convention? How will the proposals improve Parliament's ability to hold the Executive to account?

Christopher Leslie: I do not know where the hon. and learned Gentleman's arithmetic comes from. If he looks back at the numbers in the different parties, he will see that the Conservative party is by far the most overwhelming party in the second Chamber.
	As for the question about the reports in Sunday newspapers, as I said in my statement, they were certainly not authorised and we are investigating that matter. However, as with many issues, particularly those that are as large as this, it is not surprising that things leak out, but I deplore such leaks and I certainly hope that we can continue to make statements to Parliament first.
	It is right that we have the proper separation of powers and proper scrutiny of legislation, and I believe that the proposed measures will aid that in many different ways.

Joyce Quin: May I urge my hon. Friend to open wider the door to further reform, given not only that an all-appointed House was the least popular option in this House, but that the results of the earlier consultation showed strong public support for a greater elected element? May I also ask my hon. Friend, given the divisions on this issue that undoubtedly exist across the House, whether there will be a free vote?

Christopher Leslie: We do not intend to introduce legislation that includes matters on composition precisely because we had the free votes that took place last February, when no consensus emerged. We had two choices to make: to do nothing and continue with the status quo, or to take steps to continue to make progress on reform, to remove the hereditaries and to introduce a statutory appointments commission. That is indeed what the legislation will propose.

Patrick Cormack: Does the Minister accept that documents that suggest that the Anglican Church existed before the Reformation hardly fill one with confidence about the accuracy of their contents? Can he name any second Chamber anywhere in the world that has more accumulated expertise, experience or ability to hold the Government to account than the House of Lords? As he said that the new House of Lords will be significantly different, how can it be significantly better?

Christopher Leslie: It can be significantly better if 92 of its Members are not there by virtue of their birthright. The hon. Gentleman seems to suggest that if we remove those people who were there by virtue of that automatic ticket of inheritance, we somehow reduce the expertise or independence of mind of the second Chamber. He is mistaken in that. I believe that we can have a contemporary chamber that is legitimate and that can be more representative. If he scrutinises the proposals in the document with more care, perhaps he will find himself agreeing with it.

Richard Burden: My hon. Friend the Minister said that the Government intend to create a stable and sustainable upper House. By that, I take it that they intend to make stable and sustainable an all-appointed House, which, as has already been observed, was the least popular option. I stood on a manifesto that called for the upper House not only to be more representative but more democratic. I for one do not approach manifestos on a pick-and-mix basis. Will he therefore tell me what opportunity I will have, as a Labour Member of Parliament, to vote for a more democratic upper House if I am to be denied the chance this time to vote for any form of election?

Christopher Leslie: My hon. Friend must realise that the votes that took place last February changed the landscape significantly in a number of different ways. I believe that it is still possible, however, to move towards greater legitimacy for the second Chamber. The abolition of the hereditaries, an independent statutory appointments commission and making sure that those appointments reflect the shares of the votes cast of the previous general election, are a step towards a more democratic second Chamber. We do not close the door to future considerations on composition. It is just the next stage, not the final stage, but we must make progress while we can. I hope that my hon. Friend will recognise that we live in the real world and that we must be pragmatic about the progress that we can make, particularly given the lack of consensus that emerged in those February votes.

James Arbuthnot: Does the Minister accept that this document does nothing to make the House of Lords more democratic?

Christopher Leslie: As I said to my hon. Friend the Member for Birmingham, Northfield (Richard Burden), I believe that there are a number of ways in which greater legitimacy can be achieved for the second Chamber if we evolve from a hereditary to a more contemporary chamber. That is a step towards a more democratic House of Lords. If we remove hereditaries, we create a more legitimate Chamber. If the statutory appointments commission can reflect the shares of the votes cast or seats won at the previous general election, that, too, is a step towards a more democratic second Chamber. I accept, however, that hon. Members will have different views about it. It is precisely because there was no resolution in the votes in the House of Commons on this matter that we are where we are. I therefore believe that we must make those steps forward where we can.

Win Griffiths: Can my hon. Friend explain why he thinks that he can make progress with the proposals put to us today for the reform of the House of Lords when his proposal is the one that was most heavily defeated in this House?

Christopher Leslie: I hope that I have been clear in expressing the Government's views on future considerations on composition. We do not close the door to future decisions on how the Second Chamber should be composed. Indeed, we will discuss with the Joint Committee whether we can find a consensus and perhaps move forward. However, it was evident back in February, as all hon. Members will recall, that there was no consensus, and we hear arguments on both sides. Are we to do nothing, or are we to remove the hereditary peers and create a statutory appointments commission while we can, and try to reach a final stage at a later date?

Andrew Tyrie: Everybody knows that things did not pan out in February quite as had been intended, including those who may have opposed or supported an all-elected Chamber. That was partly because there were so many votes on offer, and a good number of people for whom this is not the most important issue in the world got somewhat confused between all the options. What the Government now propose is a take-it-or-leave-it single option. Why do the Government not offer three or four options—such as an all-elected, largely elected or all-appointed Chamber—and put it to the vote? The Minister and the Government will thereby see that there is overwhelming support in this Chamber for a largely elected House. If the Government do not do that, will not the public be able to see that that side of the Chamber, or at least the Government seeking to lead that side of the Chamber, has now concluded that it does not want any kind of democracy in the second Chamber, and that this side of the Chamber offers the only way in which the public, who want it, can get it?

Christopher Leslie: I do not wish to give a history lesson to the hon. Gentleman, but back in February, the Joint Committee proposed seven options. Indeed, there was also an option on a unicameral second Chamber, which was defeated. An all-appointed second Chamber was defeated, an all-elected chamber was defeated, 20 per cent. elected was defeated, 80 per cent. elected was defeated, 40 per cent. elected was defeated, 60 per cent. elected was defeated and 50 per cent. elected was defeated. There was therefore no consensus at that time. Those options were chosen by the Joint Committee, members of which come both from this House and the second Chamber. It is therefore perfectly reasonable for the Government to respond in some way to that situation, bringing forward those reforms that are necessary and that can be achieved.

George Foulkes: May I congratulate my hon. Friend—[Interruption.] May I congratulate him on coming up with a solution that maintains the primacy of this elected House of Commons and gets rid of the last vestiges of power of the descendants of robber barons? Will he give me two assurances? First, will the statutory appointments commission be required to take account of geographical representation, particularly Scotland, Wales and Northern Ireland? Secondly—[Interruption.] I am happy to stay here. Notwithstanding the great improvement in the composition of the second Chamber, will he assure me that we will not give it any more powers to scrutinise Finance Bills?

Christopher Leslie: My hon. Friend is clearly very popular in the Chamber, and I am glad that he provoked such a welcome to his question. I agree, as do both sides of the House—at least there is some consensus on this point—that the House of Commons should be supreme and that the elected Chamber should have primacy. When it comes to composition, however, we still have no consensus. On the statutory appointments commission and whether it would have regard to the make-up of society, the consultation paper proposes that one option could be for it to consider not just issues such as the balance of men and women, ethnicity and so forth but the geographic representation of the nations and regions of the United Kingdom. On his second point, I reaffirm the important principle that the House of Commons should have supremacy on financial matters. The privileges that we have had are well and long established, and I know that the other place will not wish to interfere with those important principles.

John Thurso: Is the Minister aware that for a great many of us who are genuinely and fully committed to reform of the other place, this proposal is a fudge that is the worst of all worlds? The core question is the legitimacy of the other place. As long as we can say that it is unelected and therefore illegitimate, it will simply not work. Will he not understand that there is only one valid appointments commission, and that is the people, through the ballot box?

Christopher Leslie: I think that the hon. Gentleman is in the unique position of having served in both Houses, so he knows a certain amount but not, clearly, everything that needs to be known about these questions. He expresses his view, and hon. Members on both sides of the Chamber express different views. Some prefer the composition to be more elected and some prefer it to be more appointed. His view did not prevail, however, in the votes that we had in the House of Commons—[Hon. Members: "Yours didn't."] Nor did my personal view prevail, and I am quite prepared to accept that. What should we do? Should we move forward or continue to have hereditary peers in the second Chamber? I do not believe that that is acceptable and I hope that my hon. Friends and other hon. Members will agree.

Harry Barnes: As the Government are in a mess over House of Lords reform and the Commons has rejected seven different options and given no steer on what should happen, is the Minister on the lookout for alternative ideas? Tony Benn wrote a pamphlet in the late 1950s, when he was known as Anthony Wedgewood-Benn, in which he suggested that the Privy Council should become the second Chamber. That would have the distinct advantage of sending all the right honourables along the Corridor and leaving the rest of us here to get on with some serious business.

Christopher Leslie: My hon. Friend seems to be bidding for a place on the Joint Committee. As I said, we are happy to discuss any proposals that come forward with the Joint Committee. I am not sure whether the former right hon. Member for Chesterfield would be best placed to devise a consensus across both sides of the House. The Government are not in a mess, as my hon. Friend suggested. The House of Commons remains divided, so we must make progress as we can.

John Bercow: Given that it is the Minister's misfortune to present the hypocritical sophistry that passes for Government policy on this matter, and in the light of his failure effectively to respond to the right hon. Member for Livingston (Mr. Cook) or the hon. Member for Birmingham, Northfield (Richard Burden), will he have a last stab at explaining to the House how it can be democratic to proceed with the less popular option of appointment rather than the more popular option of election?

Christopher Leslie: By the time that the hon. Gentleman got to his question, he had raised a specific point on how we can step towards a more democratic second Chamber. Yet, we found ourselves in a situation in which neither the House of Lords nor this House would support such a move. We must ask whether the retention of hereditary peers would mean that the second Chamber would be more or less democratic. I believe that retaining hereditary peers, who are there by virtue of their birth, would be less democratic and that they should go.

Eric Martlew: My hon. Friend will be glad to hear that I shall support the Bill on the ground that I do not want to go back to my constituents or local Labour party to tell them that I voted to keep hereditary peers. In February, I voted for a 100 per cent. democratically elected Chamber and a 100 per cent. appointed Chamber because I do not believe in the hybrid system. I went to hear the statement in the other place and Lord Strathclyde, the leader of the Conservatives, threatened to use hereditary peers to interrupt Government business because he did not agree with the policy. Does my hon. Friend agree that the killer comment came from Lord Marsh, who sits on the Cross Benches? He reminded the other place that the Conservative party had a majority in this House and the other House for 18 years yet did nothing about reforming the House of Lords, so we should take no lessons in democracy from Conservatives.

Christopher Leslie: It is interesting that Opposition parties have made not one proposal to try to rectify the balance of the political composition in the second Chamber or to suggest that there should be more Labour peers, who are in a small minority in the second Chamber. I heard Lord Strathclyde's comments and I trust that I should not interpret them as meaning that he would obstruct parliamentary business, because that would be inappropriate. It is possible to take steps toward a final stage and, especially, a consideration of composition, but for the time being, we must recognise that we are where we are and that we need to get rid of the hereditary peers. I am glad to have my hon. Friend's support.

Andrew Mitchell: As one of those who has adamantly opposed any form of election to the second Chamber and is therefore intrinsically more sympathetic to the central thrust of what the Minister has said than many of his Back-Bench colleagues, may I tell him that I am not happy about the idea of the appointments commission either? Why would it be intrinsically better for the power of appointment to be taken away from the Prime Minister, who is democratically accountable, and given instead to a unaccountable and unelected commission that is currently composed of a building society grandee, a governor of the BBC and an activist from Islington?

Christopher Leslie: We want to create a new statutory appointments commission. One of our proposals is that the commission should make its appointments free from the Prime Minister's patronage or interference and that the number of appointments that it makes should reflect the numbers of seats won or votes cast in a previous general election. That would represent a step toward a more legitimate appointments process. I urge the hon. Gentleman to investigate the proposal more closely because, of course, it is supported by the Conservative Front Benchers.

Gordon Prentice: Why can we not be honest and remind people that the Prime Minister made his position clear a week before the crucial February vote? He wanted a wholly appointed second Chamber, which is something that I repudiate. If there were a vote in the Labour party outside the Chamber, the overwhelming majority of people would vote for—

George Foulkes: Abolition.

Gordon Prentice: If the party did not vote for abolition, it would vote for a wholly elected second Chamber.

George Foulkes: Abolition.

Gordon Prentice: May I ask my right hon. Friend to let me finish? On the theme of honesty, I have in my hand the Labour party national policy forum consultation document on democracy and citizenship. It says, "We believe"—that includes people such as myself—that individuals should
	"govern their society effectively through democratic institutions."
	How can a wholly appointed second Chamber be squared with that aspiration to bring democracy to our institutions?

Christopher Leslie: My hon. Friend expresses his frustrations, which I think are largely channelled toward the lack of consensus last February, because if his opinion had prevailed, progress could perhaps have been made. All hon. Members expressed their views—he expressed his, I expressed mine and the Prime Minister expressed his—but a majority was not achieved for any of the options proposed at the time. We therefore face the question of whether to keep or reject the hereditary peers. I believe that it is right to remove them.

Andy Reed: I respect the Minister's attempts to argue his case, but Opposition Members and, especially, Labour Members, have pointedly made it clear time after time that it is to be welcomed if we take it for granted that we should get rid of the hereditaries. The argument then shifts to what we should do. Those of us who voted for an elected Chamber in February want another chance to have that vote. Why should I and other hon. Members not be given the chance to go for that option before the next general election? I have not heard a single argument this afternoon that has convinced me that I should be denied that right.

Christopher Leslie: With the greatest respect to my hon. Friend, we had a lengthy and detailed opportunity to resolve some of the questions in February this year and the House declined to resolve the matter. Should we spend our time constantly revisiting the issue, perhaps at the expense of other priorities? Our constituents want to us to consider public services and other constitutional matters too. We must have regard to the decisions that Parliament took on 4 February yet make progress on disqualifying Members of the House of Lords who are convicted of serious offences, on setting up the statutory appointments commission and on removing hereditaries from the second Chamber. Many of those commitments were in our manifesto, so we must be realistic about making progress when we can.

Anthony D Wright: We are losing sight of the moves that we have already made to reform the second Chamber, on which the Government should be congratulated. I take on board the comments that have been made about this House's desire for a proportion, if not all, of the second Chamber to be directly elected, but I take issue with my hon. Friend's points about composition. He agreed with the comment in the Joint Committee's report that the status quo of the composition of the House of Lords was undesirable. Maintaining that composition should not be an option rather than merely being "undesirable" because this House's will is that the status quo should not be an option.
	Secondly, the extended activities of the second Chamber have been mentioned and it has been stressed that the pre-eminence of this House must be uppermost in people's minds. Will my hon. Friend give another assurance that there will be no such extension in respect of financial matters, such as the Finance Bill, and that we will resist all calls from the second Chamber to extend its role in that way?

Christopher Leslie: I confirm that the Government oppose any diminution of our rights and privileges to constrain the second Chamber in respect of financial privilege. My hon. Friend quotes the Joint Committee report as saying that the status quo is undesirable. We agree with that. Of course, the hereditary element is a significant part of that composition, which is why we want to remove it.
	My hon. Friend is right to say that we should recognise the great progress that has been made. We have already got rid of more than 600 hereditary peers, and my colleagues have had a significant role in achieving that. We have proposed a new Supreme Court, abolition of the office of Lord Chancellor and the establishment of a new independent judicial appointments commission. We have also given devolution to the nations and regions. Our constitutional programme is significant, but we still need to move forward. That is exactly what the proposals suggest.

Chris Bryant: Delighted as I would be to see the back of the hereditary peers, and intrigued as I am at the prospect of Jeffrey Archer not only being removed from the House of Lords but applying to return to it—that really would be a work of fiction—is there not an enormous irony? Not only are the 92 hereditary peers the only elected Members of the second Chamber, but my hon. Friend's proposal is the least popular option in the House, the country and the parliamentary Labour party. Is he still open to proposals to improve this measly measure so that, for instance, we can get rid of the equally illegitimate bishops, who should no longer sit in the House of Lords, and provide for a third stage of House of Lords reform?

Christopher Leslie: My hon. Friend is eager for more reform and we intend to provide it in our proposals. I underline that we do not close the door to future consideration of composition. We will continue to listen and respond to proposals and to discuss the deliberations of the Joint Committee with it to discover whether a consensus can emerge. This is not the final stage, but we have to accept that the decisions of the February votes provide us with a need to achieve a stable and sustainable House of Lords for the time being. That is basically what the proposals in our documents do.

Points of Order

Christopher Chope: On a point of order, Madam Deputy Speaker. May I raise Government abuse of Standing Order No. 22? It was clear from my exchange with the Leader of the House earlier that he is not prepared to protect the interests of Back Benchers on such a vital matter. You will know that as a result of changes in Standing Orders, the privilege of Members to ask priority written questions has been restricted to five such questions on any one day, yet Ministers, who hitherto said that they were so hard pressed that such a restriction was necessary, are not answering the questions on the named day.
	There may be an excuse for that if the question is complicated, but why cannot straightforward questions—such as one on the costs of policing the Labour party conference in Bournemouth, the answer to which is in excess of £1.9 million—be answered on the day on which they are asked? I have just been in touch with the private office of the Secretary of State for Education and Skills. It is clear that the answer to a question that I tabled for answer today is not yet available. That question reads:
	"if he will attend a meeting with students to discuss top-up fees when he visits the University of Bournemouth in October."
	That is hardly an exacting question that needs a lot of research. The fact that it has not been answered is surely an abuse of the House. It shows that there is not much point in the House returning in the middle of September if Ministers are not going to respond to questions.

Madam Deputy Speaker: Mr. Speaker would clearly expect Ministers to respond in accordance with the Standing Orders of the House. The fact that the matter has been raised will mean that Mr. Speaker will consider the points raised.

Sally Keeble: On a point of order, Madam Deputy Speaker. A constituent of mine, John Tero, developed cancer while he was in prison and is now desperately ill. He was also the victim of a miscarriage of justice, which makes his position more serious. Because of grave concerns about the way in which he was treated, I referred his complaint to the Prison Service ombudsman. Bearing in mind the roles and responsibilities of ombudsmen, constituents and MPs, will you give a ruling on whether it was procedurally correct for the Home Office to make a statement to a radio station two days ago, giving the broad findings of the ombudsman's report, when, to my knowledge, the investigation has not been concluded and the complainant, my constituent, has not been consulted and is gravely ill?

Madam Deputy Speaker: Although that is not formally a point of order, Mr. Speaker is grateful to the hon. Lady for bringing the matter to his attention. I want to express Mr. Speaker's sympathy to the hon. Lady's constituent. Mr. Speaker would wish that the hon. Lady be given the opportunity to meet the Home Secretary to discuss the issues regarding the release of information from the ombudsman to the Home Office and its later transmission to the media before her constituent was informed.

George Foulkes: On a point of order, Madam Deputy Speaker. "Erskine May" describes certain words and phrases as unparliamentary. Hon. Members sometimes use such words in the heat of the moment and it is difficult for Mr. Speaker, you and your colleagues to keep track of that.
	Earlier today, the hon. Member for Buckingham (Mr. Bercow) used the term "hypocritical sophistry". I think that that is pretty near to something that would be ruled out by "Erskine May". In Prime Minister's Question Time, I have heard the Prime Minister use the words "deceit" and "lies"—rather, I have heard the Leader of the Opposition use the words "deceit" and "lies" in relation to what the Prime Minister has been doing. It would be useful to go over those exchanges to ensure that the "Erskine May" rules are being upheld. I am in no way criticising Mr. Speaker or you and your colleagues, but it is very important that we—in particular, the Leader of the Opposition—do not use unparliamentary terms.

Madam Deputy Speaker: It is important that all Members think carefully about their use of language. The comments to which the right hon. Gentleman referred were not directed at particular hon. Members. I am right in saying that Mr. Speaker would always ensure that the customs and traditions of the House are upheld. Orders of the Day

Arms Control and Disarmament (Inspections) Bill [Lords]

[Relevant document: Third Report from the Defence Committee, Session 2002-03, Arms Control and Disarmament Inspections Bill (HC 321), and the Government response thereto, Second Special Report from the Committee, Session 2002–03, HC 754 .]
	Order for Second Reading read.

Denis MacShane: I beg to move, That the Bill be now read a Second time.
	The Bill concerns the adapted version of the conventional armed forces in Europe treaty—the CFE treaty—signed in Paris on 19 November 1990. The agreement on adaptation of the treaty on conventional armed forces in Europe, known more familiarly as the adapted CFE treaty, was signed by all states parties to the CFE treaty at Istanbul on 19 November 1999.
	The CFE treaty limits the holdings of five categories of heavy weapons—tanks, armoured combat vehicles, artillery, combat aircraft and attack helicopters—by the 30 member states of NATO and the former Warsaw pact. It applies to the land territory of states parties in Europe. The treaty includes an important transparency and verification regime. It is seen as a cornerstone of European security and has resulted in the destruction of more than 50,000 heavy weapons in Europe. However, the treaty was negotiated at the end of the cold war and needed adaptation to reflect the break-up of the Warsaw pact and NATO enlargement.
	The adapted CFE treaty was therefore negotiated and signed by states parties to the CFE treaty at Istanbul in 1999. It replaces the old Warsaw pact-NATO bloc-to-bloc system with national and territorial ceilings for heavy weapons. The adapted CFE treaty provides for greater transparency than the present CFE treaty through a substantially enhanced system of information provision. In particular, it increases the amount of military information that each of the 30 states parties to the treaty exchanges, and enhances the regime of inspection. The adapted CFE treaty includes provisions for new European states to join, and also has an enhanced inspection regime, including a new type of inspection that could involve a large area and would not necessarily be limited to military bases. Together with the fact that some parts of military sites are increasingly owned and operated by private companies, that means that we need additional legislation to allow access to non-Ministry of Defence-owned property.
	The main provisions of this short, technical Bill amend the Arms Control and Disarmament (Inspections) Act 1991 to provide for the additional rights of entry to private land that are required to implement the additional inspection requirements of the protocol on inspection in the agreement on adaptation. On 3 February, the Secretary of State signed a memorandum confirming that the Bill's provisions are compatible with the European convention on human rights. That was subsequently confirmed by my hon. Friend the Member for North Warwickshire (Mr. O'Brien), who was then Under-Secretary of State for Foreign and Commonwealth Affairs.
	The Bill also confers a power on Her Majesty to make further amendments to the 1991 Act relating to inspections by Order in Council, should they be needed to implement future amendments to the CFE treaty relating to inspections. During the Bill's passage through the House of Lords, the Delegated Powers and Regulatory Reform Committee agreed that that level of delegation and control was appropriate. The Bill thus provides the legislation necessary for the UK to ratify the adapted CFE treaty quickly when the time is right. While the UK is committed to the treaty's earliest possible entry into force, our position and that of our NATO allies remains that ratification can only be envisaged in the context of full compliance by all states parties with agreed treaty limits, consistent with commitments in the CFE Final Act. As right hon. and hon. Members will be aware, those commitments are those agreed between Russia, Georgia and Moldova on the closure of Russian bases and the withdrawal of Russian troops and equipment from the territory of the other two states, which have not yet been fulfilled. We and other NATO allies continue to urge Russia to work with Georgia and Moldova to resolve the outstanding issues on the basis of the principle of host nation consent.
	The Secretary of State will not bring the Bill into force in accordance with clause 3 until the Government are ready to ratify the agreement on adaptation. When the Secretary of State decides that the time is right to bring the Bill into force in accordance with clause 3, the Government are content to notify the House at least 21 days before their intention to proceed to ratification. I hope that the House will be able to support the Bill.

Peter Luff: The official Opposition certainly welcome the Bill's objective, which reflects the desire of the whole House and the country for a safer world with fewer armaments, particularly those that no longer serve any strategic purpose. Having said that, I am a little surprised by the short time that the Minister took to introduce the Bill. Good as it is, it includes a number of things that stretch the official Opposition's good will a little and the charity of my colleagues a good long way. I hope that when the Minister responds to what is likely to be a short debate he will be able to demonstrate that our charity is not misplaced by giving us more specific assurances on a number of points than he provided in his opening remarks.
	Sadly, I have a strange feeling that our debate—perhaps given our limited presence in the House, colloquium would be a more appropriate phrase—will not be leading the news broadcasts later. That is a shame, because the treaty that we are effectively adapting today has by any standards been a conspicuous success and something that we should celebrate. It has played a major part in building the peace and security of our continent, which we should never take for granted. The many violent events that have convulsed Europe and cost millions of lives in the last century, most recently in the Balkans, should remind us that peace is not the natural order of our continent. One of our prime duties in the House is to work for the greater security of our constituents, and today we are considering a matter of great importance to that security.
	This debate is inherently above party politics and, as was evident in the debates in the other place to which the Minister referred, there is a lot of common ground to be found. However, we will seek clarification of a number of points, and I am confident that the Minister, with his customary good humour and diligence, will be able to provide that. It is right to put on record the House's gratitude to the Select Committee on Defence for its excellent third report for the 2002–03 Session on the Bill. It was published in April, and is an excellent piece of pre-legislative scrutiny that genuinely focuses and informs our debate today. I am sure that, like me, the Minister is a strong believer in pre-legislative scrutiny, especially on technical matters such as the Bill, where some calm deliberation, ahead of the often more partisan nature of the processes involved in the Bill's passage through the House and Committee, can assist hon. Members. Such is the Defence Committee's third report, and I commend it to anyone wishing to understand the issues raised by the Bill.
	I should also like to express my gratitude in preparing for this debate to the Library, for its excellent research paper. I do not know how often this has been done in the past by the Library or the Government, but the text of the Arms Control and Disarmament (Inspections) Act 1991, as amended by the Bill, is included in an extremely helpful appendix to the research document. The Government might consider incorporating such amended measures in explanatory notes to technical Bills in future. Frankly, the Bill as it stands does not make a great deal of sense. That is not a criticism of the parliamentary draftsman or the Government—the changes that the Bill will bring into effect are difficult to understand. The Library's approach of crossing out the bits in the 1991 Act that we are repealing and deleting is helpful, and assisted my hon. Friend the Member for Boston and Skegness (Mr. Simmonds) and I as we prepared for this debate. The Library therefore deserves special thanks.
	The Minister rightly put the Bill in context, and explained how the original treaty placed limits on the numbers of combat aircraft, tanks, attack helicopters, armoured vehicles and so on. In fact, he rather undersold the case for the treaty which, I think I am right in saying, is probably the most comprehensive arms control ever agreed in history. It is less inherently fascinating than the discussion about nuclear weapons that tended to dominate the news headlines at the time, but the fact is that this vital treaty has provided a means of establishing a military balance in Europe.
	First and foremost, it was an arms reduction treaty, which demanded that the contracting parties reduce their heavy weaponry and equipment by 50,000 items—a not insubstantial figure by any reckoning. Just as importantly, as the Minister emphasised, it was a conflict prevention treaty aimed at increasing transparency, building confidence, and reducing tension. It did that by preventing provocative and destabilising concentrations of military forces, and still does its work today, even unadapted, as it remains in force, pending the entry into force of the agreement on adaptation.
	The fact such a treaty could be agreed reflected the mood of increased co-operation and good will between the two blocs towards the end of the cold war. Verification of compliance was achieved by inspections and the treaty's provisions were incorporated in UK law by the 1991 Act. The second CFE review conference was held in Vienna in May to June 2001, and made the following observations on implementation:
	"The implementation of the Treaty since its entry into force in 1992 has brought positive results including significantly reduced holdings of Treaty-limited equipment and increased confidence through transparency and predictability involving conventional armed forces. The States Parties welcomed the impressive progress that had been made in implementing the Treaty, including the reduction of more than 59,000 pieces of conventional armaments and equipment, the exchange of about 6,000 notifications per year in addition to annual exchanges of information and the conduct of more than 3,300 on-site inspections and observation visits to verify compliance with the provisions of the Treaty and its associated documents. With regard to the Concluding Act on Personnel Strength, the States Parties noted with satisfaction that the personnel strength of conventional armed forces in the area of application had been reduced significantly."
	That is all very good news, but not everything was perfect. The conference also concluded that
	"in general the CFE Treaty was operating and being implemented in a satisfactory manner. However, there were a number of implementation issues requiring further consideration and resolution in the Joint Consultative Group.
	The States Parties noted"—
	I am still quoting from the conclusions—
	"that certain numerical limitations established by the Treaty were being exceeded. The States Parties were informed that the excess, which had been declared to be of a temporary nature, had been decreased. They expect"
	this was in 2001—
	"that the remaining excess will be eliminated as soon as it is possible. They reaffirmed the importance of transparency with regard to the elimination of any excesses over CFE Treaty limits. In this context, they reiterated their commitment to full and continued implementation of the Treaty and its associated documents and their adherence to its numerical limitations."
	Thus, there were reservations.
	The rapid changes that followed the end of the cold war in 1990 could not have been envisaged at the time the treaty was originally agreed. We now know that those were of sweeping significance. I was one of the woodpeckers who attacked the Berlin wall in early 1990 with a chisel which, I remember, was, ironically, manufactured in the People's Republic of China. Little did we know what we had begun. The Warsaw pact collapsed, leaving only NATO as the military pact operating in Europe, and the USA as the single remaining superpower, which made necessary a great re-adjustment of strategic priorities and strategic thinking around the globe.
	With reference to the Bill, the most important consequence of the end of the cold war was the disintegration of the USSR and the emergence of a host of new states—Czechoslovakia became the Czech and Slovak Republics, and countries such as the Ukraine, Belarus, Georgia and Armenia emerged as international players in their own right. Now a total of 30 nations are parties to the treaty.
	As I am sure the Minister will agree, these changes made the control and limitation of conventional weapons in Europe no less important. Indeed, in some cases it has become more so, as out-of-area or former Soviet equipment needs to be accounted for more closely. In 1999, as the Minister told us, the agreement of adaptation was signed in Istanbul, but the 1990 treaty remains valid and takes account of the demise of the blocs, setting ceilings on a national basis, rather than a bloc basis.
	One learns something all the time in the House, and I was intrigued by the table in the Library document, which sets out the national ceilings under the adaptation agreement. It is perhaps no surprise to discover that the UK has, under the national ceilings, an allowance of 843 battle tanks, 3,017 armoured combat vehicles, 583 pieces of artillery, 855 combat aircraft and 350 attack helicopters. France has rather more battle tanks than we do, at 1,226, but Armenia boasts 220 battle tanks and 220 armoured combat vehicles. To my surprise, neither Luxembourg nor Iceland boasts any. They have nul points in every category—no battle tanks, no armoured combat vehicles, no pieces of artillery and no combat aircraft.

Mark Francois: What about the Swedes?

Peter Luff: They do not seem to have a national ceiling under the adaptation agreement.
	Crucially, the Bill and the adaptation agreement provide for greater entry rights to private land under the inspections procedure. This is one of the issues on which we seek further clarification from the Minister, for despite the noble objectives of the Bill, it is a technical Bill and deserves scrutiny on specific points.
	I turn first to the limits and burdens under the new agreement. I should be grateful if the Minister could explain the annual limit on inspections that can be carried out by one state in any given year. Equally importantly, given the tables on page 10 of the third report of the Defence Committee, does the Minister envisage that the increased liability under the 1999 agreement to host inspections under section VII, albeit with the proviso that some may be replaced by section VIII inspections, will result in an increased financial burden or burden of inconvenience to our defence establishment, or does he believe that the number of inspections carried out will remain well under the maximum limits in practice? I suspect that his answer will be the latter, so some evidence of the reasons for his conclusion would be welcome.
	Similarly, what will be the impact on other parties to the treaty, especially the younger countries? There is a difficult balance to be struck between ensuring that inspections do not place an intolerably high burden on the host country, and ensuring that the inspection and verification regime is suitably strict and transparent enough to guarantee that all parties to the treaty are honouring their obligations. Does the hon. Gentleman believe that the balance will be successfully achieved under the adapted treaty? I hope for rather more than a straight "Yes" from the Minister. Some explanation of the grounds for his optimism would be appreciated.
	One of the most important issues in the Bill is the impact on the private sector. It is reassuring that in paragraph 18 of its report, the Defence Committee states that it believes that the position for private operators will not be
	"significantly different after the Adaptation Agreement is implemented than before".
	The Committee gives its reasons for that. It states:
	"This is for a number of reasons: in the past less than half of the existing liability has been taken up; inspecting states will bear the cost of conducting additional inspections, and as new members join NATO the pool of other states who might wish to inspect UK forces is likely to diminish."
	However, there is the potential for increased inspection of privately owned land, as the Government have acknowledged, if only because of the increased private sector role in defence matters. If my memory of my reading for the debate serves me correctly, we are discussing only matters that can be concealed behind doors of more than 2m in width. I believe that that appears in the agreement.
	I do not wish to appear to be nit-picking, but I do think that the explanatory notes are a little over optimistic when they state:
	"The Bill will have no impact on business."
	In this context, I shall speak for a moment about Qinetiq, which has a geographically large establishment in my constituency, Mid-Worcestershire, at the former RAF Pershore site, which was a dispersal site for Vulcan bombers. The site has acquired unlooked-for fame as a result of Government policy in other very different areas, but it is one of more than 25 Qinetiq sites, of which at least two others are in Malvern in the constituency of my hon. Friend the Member for West Worcestershire (Sir Michael Spicer), and they may all be affected by the Bill.
	Qinetiq is the company in which the Defence Evaluation and Research Agency—DERA—was vested back in 2001. Since its establishment in July 2001, Qinetiq has taken ownership of these formerly MOD-owned sites, including training areas, testing sites and airfields. I know from my visits to the Pershore establishment that it is possible that inspections may be required there. Under the 1999 agreement on the adaptation of the CFE treaty, as the Library briefing paper notes, these will be defined as "declared sites" and thereby made subject to inspections under the Bill. The number of sites run by Qinetiq may well increase over the coming months and years. That, I imagine, is the Government's expectation.
	Although I note that no private company or owners of a site have yet refused an inspection, I believe it is important that such companies do not risk falling foul of overly intrusive or demanding inspections through no fault of their own, but simply through an over-optimistic interpretation of the implications of the legislation. What steps have the Government taken to ensure that all those contractors, land-owners and other groups, such as Qinetiq, which could potentially be affected, are fully aware of the implications? What consultations have there been with such groups? How confident are the Government that they have got the assessment right?
	I turn next to the Baltic and Balkan states. I find it interesting that they, particularly the Baltic states, are absent from the treaty. I understand that the fact the Baltic states are not parties to it has been a cause of concern to Russia in the past, given that it might permit countries to station large amounts of conventional military equipment there, yet not be in breach of the treaty. As the Library note puts it, Russia believes the absence of the Baltic states from the treaty constitutes a loophole that could allow NATO to deploy large numbers of forces and equipment to a potentially threatening position, without reference to CFE limits.
	Of course, we are pleased that the new agreement contains provisions for the accession of states that are not at present party to the CFE treaty. I understand, and the Minister may be able to confirm when he winds up the debate, that the Baltic states have indicated that they would consider joining as part of their accession to NATO. Could the Minister, when he sums up, set out what progress has been made in that respect and tell us whether any substantive negotiations have yet taken place? Could he also enlighten us as to the position on the Balkan states that are not parties to the treaty?
	I shall speak briefly about Russia. In its helpful report, the Defence Committee stated:
	"Because the Act would give the Government the ability to ratify the Agreement by Statutory Instrument, consideration of the Bill itself needs to be focussed on the question of ratification."
	I am conscious that the House may feel that my remarks so far have not properly addressed the essential question. There are a number of extremely important outstanding non-compliance issues in relation to Russia, Georgia and Moldova, which I know my hon. Friend the Member for Boston and Skegness (Mr. Simmonds) will raise in greater depth in his winding-up speech. I simply say at this point that despite some progress, the on-going problems remain a matter of concern to the Opposition. The Minister should be aware that we will seek to explore those problems later in the debate. I hope that he will address them, as they go to the heart of the timetable of our ratification of the adapted treaty.
	Mention of timetables brings me to what the Minister will be glad to hear is my last but one point. I should like to register my surprise that the Bill has taken so long to reach this House, especially as it completed its passage in the other place on 30 January this year. That time lag alone constitutes a compelling reason why we should be fully updated about what has happened in the past eight months. Given that recent days have not exactly been over-burdened with legislation, I am surprised that the Government have delayed the Bill so long. The conspiracy theorist in me asks why that is the case. Was it kept back merely to occupy us during this rather awkward September fortnight that the Government have landed on the House or is there some more substantial and genuine reason for the delay? I think that the House should be told, as the Bill has languished in purgatory for an extraordinarily long period.
	My last point concerns the statutory instrument procedure, to which the Minister referred. The Opposition have reservations about the fact that the Bill contains powers to provide that future changes made by Her Majesty by Order in Council will be effected by statutory instrument and not primary legislation. It is in that specific regard that the official Opposition's charity is being stretched a little. We are looking for a rather more categorical reassurance from the Minister than he offered in his speech. Yes, the Government reassured the Select Committee on Delegated Powers and Regulatory Reform, which expressed its contentment with their plans. In November 2002, now almost a year ago, it said:
	"In view of the limited nature of the power and the fact that it will be subject to affirmative procedure, we consider that this level of delegation and control is appropriate."
	My hon. Friend the Member for Boston and Skegness will return to that subject, as well as to ratification issues, if he is lucky enough to catch your eye, Madam Deputy Speaker. In essence, our position is that we regard the procedures proposed in the Bill as inadvisable, but not, on this specific and limited occasion, objectionable. We seek a reassurance over and above that which the Minister gave the House in his speech that the Government will not in future cite that exception to the general rule that treaty matters are matters for primary legislation as a precedent in respect of other treaties or modifications to them.
	As the Minister knows, other more contentious treaties are in prospect, and they could also be subject to later revision. That revision might be significant in some people's eyes, if not in other people's. Opposition Members may judge such revision to be fundamental, even if the Government change their mind on that question. We remain of the view that primary legislation is the right way of dealing with treaties. I hope that he will confirm that that is the Government's view. I hope that the provision is the exception that tests the rule and does not break it.
	The Minister referred to the Ponsonby rule, although he avoided that exact phrase. It is widely expected that the Government will embrace the so-called Ponsonby rule, and that appeared to be what the Minister said. It is an undertaking observed by Governments since the 1920s that treaties that have been signed and are subject to ratification are laid before the House for 21 days before being ratified. Indeed, the Government promised as much in their response to the Defence Committee in June:
	"The Government is content to give a specific undertaking in the Second Reading debate on the Bill to notify the House at least 21 days in advance of its decision to proceed to ratification, to allow for additional discussion of the issues at that time."
	I cannot immediately recall exactly the word that the Minister used on the Ponsonby rule in speaking about it towards the end of his speech, but it seemed to fall short of the wholehearted commitment that I thought we were getting in the Government's response to the Select Committee report.

Denis MacShane: indicated dissent.

Peter Luff: I am delighted that the Minister has indicated dissent, as Hansard will say. There is clearly a wholehearted commitment to allow 21 days and I am grateful for that assurance.
	I am still looking for one further reassurance in respect of how the Government will treat the 21 days. For example, I trust that they will not announce their decision to ratify on the first day of the Christmas recess, reducing from 21 to seven days the effective notice period for the House. As well as embracing the letter of Ponsonby, I hope that the Government will be content to embrace his spirit and give us 21 parliamentary days—not necessarily sitting days, but 21 days during a full sitting period, or three full weeks—so that proper consideration can be given to the matter.
	The Opposition believe that this is an important Bill, despite its being so concise. It reflects important international developments and also makes an important contribution to conflict prevention by reducing the number of weapons that could be deployed in Europe. It is necessary for the implementation of the 1999 agreement and for the treaty's ability to keep pace with developments. I am pleased that it has finally reached us. I hope that the Minister will be able to assist with the clarifications for which I have asked, but subject to reassurances from him, we certainly look forward to the Bill completing its passage.

Michael Moore: May I echo the comments of the hon. Member for Mid-Worcestershire (Mr. Luff) in expressing surprise that it has taken quite so long for such a modest Bill to come to this end of the building from another place, considering the period that has now elapsed since it completed its stages there? None the less, it is an important measure and it is a shame that we can muster so few hon. Members in the Chamber to hear this debate and participate in it. We can only hope that in the highways and byways of Brent, to pick a place at random, people are discussing the issues as seriously as they should be.
	The Liberal Democrats believe that the treaty is very important. The principle of inspections and verification is important to arms control. As my noble Friend Lord Wallace of Saltaire said last November in another place, the Bill represents a modest but useful extension of the treaty.
	The original treaty has been very valuable. When we reflect on the sweeping changes that have occurred since it was passed in the international community and Europe in particular, we should perhaps accord it more credit for that stability than we are in danger of doing. Sometimes, I believe that we in this country and this House are in danger of forgetting the cold war and the effect that it had for a long time on the area covered by the treaty, from the Atlantic to the Urals. I am afraid that I cannot claim credit for physically helping to bring down the Berlin wall, as the hon. Member for Mid-Worcestershire did, and neither do I have the Minister's credentials in promoting the cause of democracy in places such as Poland and elsewhere in what is now central Europe. However, for those of my generation—if I may be so cheeky—it was an important development when the cold war and all the dangers that it posed was put safely in a new context. The treaty has been important in that regard. Our threats assessments tend nowadays to be slightly more focused on international terrorism, but as the hon. Gentleman said, Europe's tortured history demands that we should, in a more traditional context, continue to take issues of peace and security seriously.
	In recent months, we have debated long and hard in this Chamber the enlargement of the European Union. The fact that so many of the countries that were originally parties to the treaty from the other side, if I may put it that way, are now to join us in the enlarged European Union is a great sign of progress. As that political situation has changed, the treaty should be amended to catch up with modern reality.
	I do not want to repeat many of the valuable remarks that have already been made and highlight issues of disarmament that have been mentioned. I wish simply to ask the Minister for a couple of clarifications. One of the founding principles of arms control that underpins the treaty is mutual inspection. Last November, my noble Friend Lord Wallace asked Baroness Symons whether the treaty applied to United States bases in the United Kingdom or elsewhere in the treaty area. For whatever reason, the Baroness was unable or unwilling to respond to that point; perhaps the Minister would do us the courtesy of plugging that gap in our understanding.
	The hon. Member for Mid-Worcestershire mentioned Qinetiq. I do not want to put words into his mouth, but I hope that he was not suggesting that it should get special treatment as a private institution. Given its unusual hybrid status, I understand that it may fear unreasonable intrusions, but it is not surprising that some focus should fall upon it. Will the Minister clarify how it fits into the process?
	I echo hon. Members' concerns about ongoing non-compliance with existing treaty obligations, particularly by Russia—although I accept that the adaptation to the treaty recognised Russia's concerns about its border security in areas such as Georgia and Moldova. The Minister said that we continue to urge the Russians to comply. Will he tell us what progress is being made and how soon we may hope to find ourselves in the happy position of ratifying the treaty?
	I reinforce what was said about the importance of Parliament having the opportunity to contribute to the debate once the Government have decided that they should ratify the treaty. To borrow the elegant phrase used by the hon. Member for Mid-Worcestershire, the statutory instrument approach is inadvisable, but not objectionable. Liberal Democrat Members—perhaps with more consistency, as we have been on this side of the House for longer than Labour or Conservative Members—do not like the principle at all. We must get a specific assurance from the Minister that it is specifically linked to this treaty and adaptation.
	I have no desire to detain the House any further than has been necessary. Liberal Democrat Members believe that this is an important treaty that is sometimes not given enough credit for its contribution to our peace and security. In that spirit, we wish to see the Bill passed.

Mark Simmonds: Although the Bill is largely technical, and is certainly short, this has been an interesting and instructive debate. The issues addressed by the Bill are much broader than its specifics would suggest. It goes to the heart of the changes to the geopolitical landscape that have taken place over the past decade and a half and of the wider debate on arms controls and effective measures to help conflict prevention.
	As my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) said in his detailed and articulate speech, the world in which we live today has changed dramatically from that of 1990. It is therefore right that in 1999 the treaty on conventional armed forces in Europe was updated to reflect that fact. As my hon. Friend said, that has led to a reduction of 59,000 conventional armaments and some 3,300 inspections and visits. The new treaty recognises that the old blocs of the cold war are no longer so relevant. The Warsaw pact has gone, and NATO has assumed a more encompassing role, particularly in view of its planned enlargement to include former Warsaw pact countries. The 1999 treaty reflects that with the replacement of equipment ceilings for blocs with ceilings per state. I welcome that recognition that the bloc mentality is over, but I cannot but be puzzled that the Government, particularly the Minister, are still determined to forge the European Union into another bloc through the integrationist constitution.
	I will not reiterate in detail the points made so ably by my hon. Friend, especially in relation to the need for technical changes to the inspections and verifications procedures. I would, however, like to evaluate what might be termed the Russian dimension, which was mentioned by my hon. Friend, by the Minister and by the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore). That is linked in many ways to ratification timings, and revolves around the principle of the free consent of host states to the deployment of foreign military equipment. Conservative Members have concerns about the Russian position in Moldova and Georgia, despite a Russian commitment to withdraw its forces from those countries by the end of 2002. In September 2002, President Putin told the United Nations Secretary-General that
	"unless the Georgian leadership takes practical action to liquidate terrorists, and if bandit raids continue to originate from its territory, Russia . . . shall take adequate measures to resist the terrorist threat".
	That does not suggest that as recently as this time last year President Putin envisaged that the conditions would be right for Russia to withdraw her troops. Although I appreciate that the situation in Abkhazia means that relations between Russia and Georgia remain tense, I am aware that some progress has none the less been made in reducing treaty-limited equipment levels to the required amount. I would be grateful if the Minister would tell us what progress has since been made and whether he is satisfied with efforts to resolve these issues.
	Does the Minister have any idea when a UK inspection team might be able to visit the Gadauta base to verify whether it has been fully transferred from Russian control, as planned? Similarly, separatist disputes in Moldova complicate the situation there. That means that the estimated date for Russian withdrawal is now the end of 2003—a year later than planned—and it appears that even that time scale may have to be further extended. I understand that the mechanics of withdrawal are complex, especially as the aptly named separatist leader, Mr. Smirnov, controls the railways. Will the Minister update the House on any progress in that direction, given that it is now eight months since these matters were debated in the other place?
	Contained within the Russian dimension is the question of armament allocation. The terms of the original treaty applied to the Russian army and land forces, but a loophole appeared to the effect that, for example, the transfer of motorised regiments to the navy could effectively remove them from inclusion in the matériels counted towards their ceilings. Does that opportunity still exist; or have changes since the original treaty and the new national ceilings effectively encompassed all matériel, regardless of the service to which it is attached?
	I want to highlight a few other areas that were touched on by my hon. Friend the Member for Mid-Worcestershire and by my noble Friend in the other place, but still require updating and clarification from the Minister. Conservative Members have concerns about the powers that the Bill grants the Government to enact future changes to the treaty by statutory instrument. Baroness Symons offered a reassurance that such amendments would be subject to affirmative resolution. However, given that since the original treaty's enactment in UK law in 1991 it has needed to be amended in Parliament only very infrequently since, primary legislation allowing proper scrutiny once every 12 years or so does not represent an intolerable burden on the time of this House and is not something to which the Government should object. I am also concerned that such a procedure for amending treaties, although we will not oppose it in the Lobby on this occasion, should not be viewed as a precedent for amending other treaties.
	I am uneasy about why this Bill is coming before us now. It has taken eight months to arrive, yet there appears to be no indication of the time scale that the Government are contemplating for ratification. I am concerned to discover that so far only Belarus and Ukraine have ratified the adaptation agreement agreed in 1999—and no NATO state has proceeded to ratification—although for most state parties the benefits of ratification would outweigh those of waiting for a resolution of the Georgian and Moldovan disputes. Are the Government determined to wait until that is resolved, despite its impact upon ratification timetables?
	In addition to the Government's pledge that the matter will be laid before the House for 21 days before ratification, will the Minister tell us when he envisages ratification taking place, given that four years have already passed since the conclusion of the agreement in Istanbul? My understanding of the Bill's contents is that hon. Members are being asked to provide the Foreign Secretary with ratification powers that may last and be unused for years. The geopolitical landscape may have changed by the time the Foreign Secretary ratifies. Surely it is right for the House to have the ability to judge and deliberate on those matters in context when ratification occurs.
	Does the agreement mean that our bases and facilities in Gibraltar and/or Cyprus will be subject to inspection by other parties to the treaty? Will the Minister clarify the interaction of territorial ceilings? Although I note that in most cases the two ceilings are the same, am I correct that equipment in areas that are not covered by the territorial terms of the agreement, for example, the Russian territory beyond the Urals, would remain covered by that country's national ceilings?
	The debate has been important. Despite the technical nature of the Bill's provisions, the broader issues that are pertinent to the measure's background are significant foreign and defence policy questions. I am eager to listen to the Minister's response and clarification of important points that my hon. Friend the Member for Mid-Worcestershire, the hon. Member for Tweeddale, Ettrick and Lauderdale and I have raised. In the expectation that the Minister will offer adequate assurances, we are happy to support the important Bill and endorse the contribution of the 1990 and 1999 agreements to making a Europe a safer place.

Denis MacShane: With the leave of the House, I should like to reply to the debate. I congratulate hon. Members on solid contributions and the excellent work on the Bill. It is right to note that 59,000 major pieces of weaponry have been destroyed under the agreements. We may all take some credit for that.
	Whenever the hon. Member for Mid-Worcestershire (Mr. Luff) debates any matter with me, he makes an elegant, eloquent and erudite speech. We learned that he was a woodpecker, pecking at the Berlin wall. His nickname in the House should be "Woody" from now on. However, his speech was not wooden.
	The hon. Member for Boston and Skegness (Mr. Simmonds) managed to drag the Conservative party's European Union obsessions into the debate. I congratulate him on that; it is to his credit. The more the Conservative party shows its obsession and fanatical dislike of Europe, the happier I—and, I believe, the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore)—will be. If the voters of Brent, East are listening to the debate, they will doubtless take account of the Conservative party's obsession with getting Britain out of Europe when they cast their votes. [Interruption.] I did not want to talk about such matters, but I have to reply to the debate.
	Let us revert to serious points. The hon. Member for Mid-Worcestershire was right to praise the work of the Select Committee on Defence. The document that it produced is good and the Committee is one of the House's best Select Committees. He was also right to draw attention to the excellent work of the international department of the Library. It does not receive the credit that its work merits. In my nine years in the House, I have found that the ladies and gentlemen who work there produce good documents and individual briefings of excellent quality for hon. Members. One great use is being able to examine documents side by side, for example, a treaty and the changes to it. That is a good way in which to explain matters to hon. Members and the public.
	Several important questions have been asked, and I shall try to deal with them. If I fail to deal with any points that hon. Members have made, I hope that they will write to me. I simply want cross-party consensus on the Bill. The number of inspections was referred to. The United Kingdom currently has to undertake 18 and the number will increase to 24 if the new treaty is ratified. That is a reasonable number. The majority are in the United Kingdom and some are at our bases in Germany.
	The hon. Member for Mid-Worcestershire asked about Qinetiq, which is an important private contractor for defence activity in the United Kingdom. Most of its managers come from the Ministry of Defence and they understand the obligations that are laid on not only this but other Governments. They accept that the inspection regime will have to be maintained. However, the number of inspections is not onerous and we have no evidence that they will impose a new business burden on the company.
	We are confident that the Bill is compatible with the European convention on human rights. Article 1 of protocol 1 of the convention deals with protecting the right to property. However, the right is not unlimited and we do not believe that it will pose any difficulties to Qinetiq or other private companies.
	I was asked why we were taking time to ratify. The answer is simple and the hon. Member for Boston and Skegness made it clear. The common position of all NATO member states is that we will ratify when we are satisfied that the other principal European states—of course, we mean Russia—are complying with the treaty's obligations. The hon. Gentleman was right to draw attention to the problems in Moldova and Georgia.
	Inspection in Georgia has had to be put back until next year because Russia exercised its state's right to Georgian inspection. I raised the position of Moldova in Kiev on a visit to the Ukrainian Government on Sunday and Monday. We are worried about the position in Transnistria and the activities of Mr. Smirnov, including his failure to allow the proper dismantling of the Russian arms that are stored there. That is a cause of anxiety to Ukrainian and Moldovan Governments as well as to us and the Russian authorities. A region of Europe is under the control of a certain gentleman who is not prepared to operate by the rules of the treaty. That is why the Organisation for Security and Co-operation in Europe is active there. As the Minister responsible for the OSCE's work, I assure the hon. Gentleman that we are seized of the position.
	We have to discuss ratification with our partners. We want full NATO ratification—Britain should not go it alone. I assure the hon. Gentleman that the Ponsonby rules will be fulfilled. Indeed, we go further because we are not considering sneaking ratification through. The treaty is important and Parliament, not only the House of Commons, should consider it. The advantage of the adapted treaty is that new states can join. As the Balkan states move closer to membership of the European Union or NATO, we hope that they will be ready to join. The treaty allows for that.
	The United States is a party to the treaty and I shall write to confirm whether US facilities in the United Kingdom are declared sites under its terms. The hon. Member for Tweeddale, Ettrick and Lauderdale asked about that.
	A point was made about the way in which to effect the treaty once it is ratified. Statutory instruments will be used to allow small, technical rules that apply to inspection regimes in the United Kingdom to be taken forward. With all due respect, I do not think that many hon. Members believe that primary legislation would be needed each time such changes were required.
	Hon. Members were quite right, however, to draw attention to the increasing corpus of international law by which we are all now bound, and to the need for it to be properly considered by the House. In terms of legislation in this House, however, let us remember that we are talking about any aspect of a treaty that has been signed and ratified being transposed into domestic law. It is therefore reasonable for the Government to decide whether that should be done through primary legislation or statutory instruments.

Peter Luff: The Minister's words have not given us quite the comfort that we were looking for on this matter. Would the use of statutory instruments be exceptional? Would the presumption be that they would not be used in treaty change legislation?

Denis MacShane: I was not in the House during the great Maastricht debates, which are the most famous example of primary legislation carrying into effect a significant international treaty. I would find it hard to envisage the House accepting significant changes in domestic law derived from treaty obligations if they had not been properly debated in the House, but I am unable definitively to say what this or any future Government's position would be on international treaties when they are transposed into domestic law, whether by primary or secondary legislation.
	I was asked about the Baltic states. As I have said, the new treaty allows new states to join, and the Baltic states are on the path to becoming NATO members. I assume that they will join other NATO members in examining ratification as and when we are satisfied that all parties to the original treaty—and now the adapted treaty—are fulfilling all its obligations.
	I hope that that deals with most of the points that have been raised, but if any hon. Member requires further clarification, I shall be happy to write to them. The Bill will enable the UK to ratify the adapted CFE treaty quickly at the appropriate time. Once the adapted treaty has been ratified by all states and parties and comes into force, other states in the area of application will be able to join, thus extending the scope for co-operation on arms control throughout Europe and enhancing security and stability in the region as a whole.
	The Bill is a necessary step in enabling the UK to ratify the adapted CFE treaty, but I want to assure hon. Members that legislation will not be brought into force until the time is right to do so—that is, when all states and parties have complied fully with agreed treaty limits consistent with the commitments contained in the CFE final Act. Again, I want to assure the House on the matter of the full 21 days. I do not want to give an absolute cast-iron guarantee, because I do not know where I shall be when the treaty comes for ratification. I do not know how many days might be included in a Christmas break or other break, but there is no evidence that this—or any previous or future—Government would seek to smuggle a treaty through. I know that those on the Opposition Front Bench would make jolly sure that that would not happen.
	I hope that I have dealt with all the points raised in the debate. I thank all the hon. Members for their constructive questions, which have been important in clarifying matters. I hope that the House will now give the Bill a Second Reading.
	Question put and agreed to.
	Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

Royal Assent

Madam Deputy Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
	Fireworks Act 2003
	National Lottery (Funding of Endowments) Act 2003
	Human Fertilisation and Embryology (Deceased Fathers) Act 2003
	Northern Ireland (Monitoring Commission etc.) Act 2003
	Local Government Act 2003

PETITION
	 — 
	Fair Trade

George Osborne: I am delighted to present a petition, organised by Ms Mildred Sellers, Peter Bowler and David Tonks, of more than 1,000 residents of Knutsford, Wilmslow, Alderley Edge and the surrounding area.
	The petitioners declare that they believe that the international trading system is heavily weighted in favour of the richest and most powerful countries; that in such an imbalanced world it is morally wrong to expect the poorest to compete on equal terms with the wealthiest; and that the trade rules of the world trading system must explicitly and deliberately favour the poorest countries if they are to reap the benefits of trade.
	The petitioners therefore request that the House of Commons call on the Government to do everything in their power to bring about trade justice.
	And the petitioners remain, etc.
	To lie upon the Table.

HORSE RACING

Motion made, and Question proposed, That this House do now adjourn.—[Vernon Coaker.]

Laurence Robertson: I am pleased to have secured this Adjournment debate on the Office of Fair Trading's investigation into the control of horse racing, and I am grateful to the Minister for staying behind to reply to it, and for his co-operation on this issue.
	In my other role as a shadow Department of Trade and Industry Minister, part of my responsibility is for competition and consumers, but I am holding this debate as the Member of Parliament whose constituency contains the Cheltenham race course at Prestbury Park, which many people rightly consider to be the greatest race course in the world, although I have not yet seen all of them.

Chris Grayling: The second greatest.

Laurence Robertson: My hon. Friend obviously disputes my opinion.
	I have also been a follower of the sport of racing, particularly national hunt racing, for more than 20 years, so I have a personal interest in the matter. Having said that, I do not have a vested interest in it, in that I am not involved in any one aspect of the sport. For example, I am not an owner, trainer or breeder, or anything similar. I am just someone who loves the sport and who enjoys the odd flutter when I have time, although not usually too successfully. The point is that I come to the debate as a neutral.
	The debate is urgent and extremely important to the sport of horse racing because the OFT has issued a preliminary notice that it believes that there are unacceptable restrictions on competition caused by the central control of the fixture list by the British Horseracing Board, by the central selling of data regarding details of races by that body, and by the setting of rules and orders by the Jockey Club.
	It is a sad fact that the many factions in racing—the breeders, owners, jockeys, stable staff, trainers, bookmakers, race courses and so on—represent warring factions. The industry is well known for that. In fact, the former Home Office Minister, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), who used to have responsibility for much of racing, once said to me, "Laurence, for all my experience of dealing with Militant in Liverpool, none of it prepared me for the racing world." I think we all know what he meant.
	It must be said, however, that the OFT's preliminary ruling has served to unite almost the entire racing fraternity in opposition to its plans. Even the Minister for Sport is concerned about its proposals. In a letter to me dated 29 August, he wrote:
	"I share your view that full implementation of the OFT's rulings, as far as we understand them, may damage the fabric or integrity of the sport".
	That is a profound statement from the Minister.
	So why is the OFT making these recommendations, and why is it looking into what is essentially a sport in the first place? Its concern should surely be for the consumer; yet in the last 10 years, attendance at race courses has increased by 21 per cent. The consumers of this sport do not seem to be unduly worried about the way in which horse racing is run. In the same 10-year period, the amount of prize money has increased by 64 per cent., the number of runners by 20 per cent., the number of horses in training by 19 per cent., the number of owners by 8 per cent., the number or races by 7 per cent. and the number of fixtures by 4 per cent. Those figures do not point to a sport that is in crisis or being badly or fairly managed; quite the reverse.
	Even more important than those figures is the fact that British horse racing has integrity. The latest row in horse racing—I have to say that there are more rows in racing than there are rebellions in new Labour—is over whether jockeys should be allowed to use mobile phones. I will not get into that argument, other than to say that the Jockey Club's proposals may be an indication of how seriously this body takes the issue of integrity.
	Does anyone really believe that rich people from abroad, such as the Maktoum family, would play such a large part in British racing if it did not have integrity? Would such people engage in a sport that was fragmented, as the OFT seems to suggest that it should be? At present racing takes place on almost every day of the year, and many evenings. There are never fewer than two meetings a day, and rarely more than four. The types of races run are carefully balanced, and prize money is systematically and sympathetically distributed. That is not just control; it is more than that. It is co-ordination—a co-ordination that attracts many people, including people from abroad, to the sport.
	Even given that success story, however, the major players in the sport—especially the organisation charged with co-ordinating so much in racing, the British Horseracing Board—recognise that many things must change, and that further significant improvements must be made. That is why the BHB recently conducted a root-and-branch review of racing that recommends many changes. As the chairman of the BHB, Peter Savill, in his recent AGM speech said:
	"The Racing Review Committee has proposed some significant changes to the racing product and the racing experience which will improve the integrity of the sport, establish a true meritocracy, strengthen National Hunt racing, put British breeding on a more level playing field with its Irish and French counterparts and increase consumer interest in the sport."
	That demonstrates that no one in the sport wants to stand still; but the OFT recommendations threaten to throw the baby out with the bathwater. The chaos that would result from the absence of central co-ordination of the fixture list and an inability to set the rules and orders for the sport centrally could not possibly bring benefits to the consumer. It would be quite the reverse: in the absence of any ability to bring together the different strands of racing—all the disparate groups I mentioned earlier—and to set rules and impose discipline, the integrity of the sport would suffer. How can that act as a protection for the consumer?
	The basis of the OFT's preliminary ruling is chapter I of the Competition Act 1998, which—here I quote from a letter I received from the OFT, dated 7 August—
	"prohibits agreements that appreciably restrict competition in the UK, unless they deliver countervailing economic benefits".
	I could respond to that in a number of ways. First, we are talking about a sport. No one has to engage in it, watch it or bet on it; that is all done voluntarily. It is not like buying bread, milk, potatoes or other essentials. This is a national sport, which should surely be governed by national rules. If I watch my home team, Bolton Wanderers, play football, they will be using the same rules that would be used were I unfortunate enough to have to watch Arsenal or Leeds.
	Secondly, does anyone really believe that consumers would like to see not one national sport called horse racing, but a number of different race courses all with different rules and standards of discipline, with no co-ordination of the types of races run or horses attracted, all—as minnows—having to sell their own picture rights and data rights to the big bad powerful bookmakers? Are individual race courses, or consumers, likely to benefit from such a free-for-all? The chief executive of the Racecourse Association, Stephen Atkins—whom I met earlier this week—does not think so. Might not the OFT break down the supposed power of the BHB, as many people in the sport fear, only for that democratic body to be replaced, in effect, by an undemocratic cartel formed within the bookmaking industry?
	Responsible bookmakers, many of whom are good friends of mine, do not want the OFT investigation to result in chaos. Indeed, a senior executive at Ladbrokes told me that recently, and it was Peter Jones, the chairman of the Tote, who helped me to put together this speech. I pay tribute the likes of Ladbrokes and the Tote for sponsoring so many races, most famously the Tote Cheltenham gold cup, which takes place in my constituency each year.
	Thirdly, such central co-ordination of fixtures and rules, and of the collective selling of data rights, therefore delivers the countervailing economic benefits that the OFT requires. Fourthly, such central co-ordination protects the sport's integrity, which, where betting is involved, is crucial to its survival and ability to prosper. A free-for-all in the control of fixtures and rules could not possibly enhance the sport's integrity, so how could that benefit the consumer, whom the OFT is supposed to exist to protect?
	As I have said, there is total recognition and acceptance throughout the sport that things must change, and many proposals are on the table. But changes brought about by heavy-handed demands from the OFT will seriously weaken, rather than strengthen, the sport as a consumer product. Virtually everyone throughout the industry fears, for example, for the future of national hunt racing if the OFT's proposals bring about the free-for-all in which they would surely result. Smaller tracks in particular would suffer. Such tracks, while being valuable sources of great entertainment in themselves, are also feeder courses—training courses, perhaps—for larger ones such as Cheltenham and Aintree. So could the wrong kind of OFT-inspired changes to the sport signal the end of the Cheltenham gold cup and the grand national, and could such changes bring about a shift away from racing on turf and towards racing on sand? Somehow, a dirt track would not fit too comfortably with the dresses and hats at Royal Ascot; it would seem rather incongruous. Such things are unthinkable but quite possible, as is significant damage to the rural economy.
	So what can be done? I suggest that the OFT treat this investigation very sensitively. It should recognise that it is dealing with a sport, not a large and dominant business. It should recognise that British horse racing is respected and followed throughout the world, and it should attempt to understand racing's characteristics, which play such a vital role in holding the sport together. I therefore ask the OFT not to make heavy-handed proposals, but to recognise the changes already being proposed within the sport itself, and to work with its representatives, rather than against them. Only by doing that can consumers be both protected and well-served.
	I hope that the OFT will be sensible, but if its final proposals are, in the Government's view, potentially damaging to the sport, I ask the Minister to use his powers under the 1998 Act to intervene. Clause 3(3) of the 1998 Act states:
	"The Secretary of State may at any time by order amend Schedule 3, with respect to the Chapter I prohibition, by . . . providing for one or more additional exclusions".
	I suggest that sport should be such an exclusion.
	I have to make this request of the Minister because it is impossible to question or talk to the OFT in this Chamber. It appears to be empowered to make decisions that could have profound effects on a national sport, and thereby on many people's livelihoods, without any reference to Parliament. It is therefore only reasonable for me to ask the Minister to intervene, if it is likely that the OFT will not take a reasonable and sensible approach.
	There is a precedent for such action. For example, the Secretary of State provided for an exemption for public transport ticketing schemes, which came into force on 1 March 2001. Furthermore, the Government are looking sympathetically at the position on the exclusive pool betting licence as operated by the Tote. Quite rightly, they are likely to allow the Tote to retain it when the organisation is privatised, as the Government have pledged. I applaud the Government for their sensitivity in that respect because it is in the interests of racing and the consumer that the Tote retains its exclusive pool betting licence—and even other bookmakers agree. I am asking the OFT to show the same sensitivity and flexibility in dealing with racing as a whole. In the absence of such a compromise, I ask the Minister to exercise his powers as allowed under the 1998 Act.
	British horse racing is a national sport admired by millions of people in this country and abroad. It is part of our heritage. Last weekend I had the pleasure of attending the 227th running of the St. Leger at Doncaster. The traditions of the sport are an integral part of it. Disraeli once described himself as a progressive Conservative, and I suggest that evolution, not revolution, is the way to improve the running, integrity and therefore the performance of horse racing to the benefit of all who take part in it.
	The OFT has the responsibility of safeguarding the interests of consumers, and I am asking the OFT to do precisely that. I am also asking the Minister to ensure that it is done in such a way that it benefits consumers rather than risk destroying the sport that so many of us love. Horse racing is the sport of kings, but it is also the sport of many ordinary people who are depending on us to get this right.

Richard Page: I congratulate my hon. Friend the Member for Tewkesbury (Mr. Robertson) on securing the debate. It takes some ability and skill—and a little luck—to get an Adjournment debate. The particular case that he has engineered reminds me of Napoleon when he was promoting various officers. He turned to those recommending various promotions and said that he did not want to know how good an officer was, only whether he was lucky. On that basis, my hon. Friend, in securing a debate in which we have up to two and half hours instead of the usual half an hour, would be a general in Napoleon's army.
	I do not wish to gallop too heavily—if I can be forgiven the pun—over ground that my hon. Friend has already correctly and eloquently gone. I speak as joint chairman of the all-party racing and bloodstock group and we know that many people are deeply concerned about what could happen as a result of the OFT investigation into racing.
	My hon. Friend referred to various factions within racing. The Minister, who is coming fairly fresh to the matter, will have gathered that those factions do not go warmly hand in hand on every issue on every occasion. Sometimes the hands are warmly round the throats of the others, but they all realise now that if they do not work together, the game is over.
	There is no need for me to tell you, Mr. Deputy Speaker, that a race course without any horses does not really have a point; and it is no good having a horse without a race course for it to compete on. Without trainers it will all get a bit difficult; jockeys might be needed as well. The idea that race courses can somehow run their own fixture lists and do their own data rights is a joke because there has to be some centralised arrangement whereby the information gets out to the public. Why? Because racing depends for a large percentage of its income on betting. Whatever we do, we must ensure that we do not upset the current arrangements. I am afraid that the OFT is approaching the issue as a bunch of innocents who have gone charging in. What upsets me is how the OFT seems to have started from a preconceived position; it now faces the embarrassment of trying to get out of it.
	I shall quote briefly from a letter from the OFT, dated 8 May, to the chief executive of the Racecourse Association. It states:
	"The OFT will be examining the scope for further competition within racing as part of its remit to ensure that markets are working well . . . considering . . . how often they race . . . the type of racing . . . the prizes they can offer."
	It continues:
	"At this stage, the OFT anticipates that increased competition would potentially benefit racegoers, punters and race horse owners. And courses should benefit from greater freedom."
	The OFT assumes that change will happen and that the automatic consequence of its report will be a benefit to racing, but I suggest that the opposite is true.
	It would be heresy to suggest that anything was greater than British racing, but in this day and age of world gambling—when information can travel round the world at the flick of a finger—the potential income is enormous. It pains me to say it but I congratulate the Government on the suggestion of a gambling Bill. If we could get a review of gambling right, the revenue for this country—which, after all, has lost its shipbuilding and other industries—from worldwide gambling could be enormous.
	Why would people gamble on racing in Britain? After all, people can gamble by watching a television screen showing live races anywhere in the world. What makes British racing attractive? As my hon. Friend suggested, it is the integrity and honesty of British racing. Unless one is remarkably lucky or incredibly foolish, one does not expect to win money at racing. One expects to have some fun and occasionally come out ahead, and that is good. Before you took up your position of responsibility, Mr. Deputy Speaker, I suggest that even you had the odd shilling on a horse at Newmarket, although I do not expect you to confess to that from the Chair. We put our money on a race in Britain knowing that there is a better chance of it being a straight race—an honest contest—than anywhere else in the world. That is why huge amounts of money have already come to this country from the far east, where people are inveterate gamblers, and I want that to happen more and more.
	If we start to break up the central data rights, how will the information be transmitted round the world? Will the individual race courses have to obtain the data rights to transmit races? I do not think so. Instead, the UK would start to suffer, because it was not providing world coverage from a unified and central source. Racing is like a many-legged chair: if one kicks away one of the legs, the chair falls over. It is crucial that we get it right.
	My hon. Friend touched on the fact that racing is growing. More people are going racing than ever before, and more horses are being raced than ever before. Much of that is because the people who lead the racing industry at the moment have decided to move it forward into the modern market and the modern age. They are to be congratulated on that. They have not sat there, ossified and unchanging. They have been working at the problem.
	The OFT has never run a business. I am puzzled about why it should consider that it knows more about running the racing industry than those who are actively involved. The assumption appears to have been that increased competition would have a variety of effects. I spoke to the OFT, offering the all-party committee's help and evidence, because I recognised that there was a difficulty.
	The racing industry does not have independent participants. People are involved in race courses, horses, the British Horseracing Board or the Jockey Club, and therefore have their own factions. Answers from the industry therefore reflect a particular slant or colour. The all-party committee meets people from all sides of the industry, and we like to think that we view their presentations with a degree of independence.
	In response to the offer made by me and my co-chairman, the OFT sent a letter to the effect that it would accept a written submission. We supplied that submission, which concluded with our strong opinion that the OFT's proposals could cause race courses to close. We also predicted a move towards what I call the barn principle evident in the US. There, trainers ensure that horses race on only one course during their racing lives. Watching American racing is, with a few exceptions, the equivalent of watching paint dry. Most races are run on dirt, and are held in only one direction around the track. There is little of the colour, excitement or variation that is attractive to the world gambling scene.
	We told the OFT that we foresaw the closure of a number of courses, and that the inevitable centralisation of racing activity around a few centres would reduce consumers' ability to attend meetings. I suggest that many hon. Members share that view, as does almost all the racing fraternity.
	The racing industry should not be put at risk. I therefore endorse the call for the Government to examine their existing powers to see whether changes could be made, and action taken, to rein in what is being considered and proposed. When I expressed extreme surprise that the OFT report should have appeared in the middle of the review being undertaken by the racing industry, I was told that the BHB had asked for it.
	When I contacted the BHB, I was told that it had wanted a reply a year ago. The board could not wait a year or more before starting its review, which is now under way, and it has already given presentations to the racing fraternity. I have a copy of its first presentation; it takes a comprehensive look at how racing can be made more exciting for all the participants, especially the public.
	Unless we want to close racecourses, reduce the number of horses in training and put our opportunities on the backburner, the Minister must take on board what is being said to him today.

Chris Grayling: I am grateful for the opportunity to contribute to the debate, as well as for the good fortune of my hon. Friend the Member for Tewkesbury (Mr. Robertson) in securing it.
	The House will be aware that I represent what is, in my humble submission, the finest race course in the world, on Epsom downs; it is the home of the Derby—Britain's greatest day out. Epsom is much more than a race course, however; it is a centre for training for people with various levels of success in the industry. It is thus an essential part of the whole racing world in this country.
	I want to touch on a few of the points that my hon. Friend the Member for South-West Hertfordshire (Mr. Page) raised about the threat posed by the OFT report to the development end of the training industry—not the big yards and the division one players, but people who play an important part in developing new horses for racing. I was worried when I read the OFT report on the future of horseracing. I thought back to a subject that the OFT touched on only a few months ago: community pharmacies. As in racing, the OFT saw a market where none exists and tried to create a sense of diverse market forces in a conventional industry. It tried to impose on the pharmacy world—as it is trying to impose on the racing world—the structures of the supermarket sector. Racing is not like that; it is a sport.

Laurence Robertson: My hon. Friend referred to supermarkets, something that I did not mention as I thought there would not be enough time. Is there an analogy with the situation faced by farmers? These days, because farmers sell their milk, as individuals, to extremely powerful organisations they are impoverished. They claim that savings are not passed on to the consumers but are held up in the chain. Is there an analogy with what could happen in racing?

Chris Grayling: My hon. Friend touches on an important point. If the proposals go through, it is difficult to imagine that they will not play into the hands of a small number of commercial interests, almost certainly in the betting fraternity. That is where the change will come.
	I strongly believe in the old adage, "If it ain't broke, don't fix it". Racing is not broke; it may need to evolve and develop, as my hon. Friends pointed out, but it is not an unsuccessful industry. Terrible injustices are not happening. Racing is working pretty well and is an asset to the nation. The trouble is that when organisations such as the OFT start tinkering there are unintended consequences.
	In the early 1990s, for example, a report by the Monopolies and Mergers Commission on the pub and brewing industry, which was designed to improve consumer choice and competition, led directly to the disappearance of thousands of country pubs. Small local pubs kept going only because of the tie—that slightly anti-competitive arrangement—and when it disappeared, so did they. We are concerned that the same effect will be seen in racing.
	Racing does not involve only a small number of centres. Of course, I do not need to worry about Epsom. The race course pays for itself many times over on just one day a year. No doubt Cheltenham pays for itself in one week of the year. So the big racing centres—the international names—will survive and flourish, and it is arguable that they would probably do better if they had more meetings each year.
	Of course, racing is now a truly national sport. Small race courses are to be found in far flung parts of the country, where racing takes place on a wild winter's day. Those race courses are an integral part of the industry, but they are the ones that will disappear. Those meetings will not happen, and racing will be concentrated instead in a number of larger commercial centres and lost in many parts of the country. But this is not just about race courses; it is also about the training industry.
	My hon. Friend the Member for South-West Hertfordshire made an extremely important point about the smaller courses serving effectively as a feeder network for the bigger meetings. When people buy their first horse, the smaller courses are where they go to race. They do not turn up at Royal Ascot for their first outing; they turn up on a Tuesday in February at Wetherby. That is where those people who dabble in racing for the first time—those who perhaps buy an eighth share in a race horse—go to see their horse run. The smaller, newer and developing trainers bring those horses into the industry and start to nurture them, and they hope ultimately to enjoy great success with them.
	One reason why I feel so strongly about the issue is that Epsom's training industry is in a particularly challenging situation at the moment. It has declined over a number of years, partly because of the value of the real estate that it sits on. Not surprisingly, it is very tempting for those sitting on land and owning big houses inside the M25 to sell them at a large profit, taking them out of the industry. A training industry that once, perhaps 30 years ago, trained 500 horses trains only about 200 today. I have been working with many people in the local racing industry to try to find a way to reverse that trend by bringing new life back into the training industry in Epsom.
	One of the things that I want to see is Epsom emerging as a training and development centre for trainers. We are talking about the possibility of setting up starter yards, where new trainers could lease blocks of 10 boxes, get into training for the first time with a few horses, begin to build a reputation and then move on— remaining in the area, we hope, but if not, going to another centre. But, of course, if the smaller parts of the racing calendar begin to be removed and the smaller courses start to be lost, the opportunity for the training industry in my area to build that starter and development role will be much diminished. The report concerns me greatly, as it seems to undermine what I hope will be an important part of the future of the training industry in Epsom.

Richard Page: Hon. Members are looking at someone who used to ride out, first lot, for an Epsom trainer a long time ago when the horses were bigger and stronger and I was lighter, and I can only endorse what my hon. Friend says. Does he share with me the worry that, if the OFT recommendations go through and the number of trainers reduces, there will be no starter races around the country and no room for the trainers whom he wants to bring into the business to bring in new horses? There will be fewer horses and we shall end up with a power play between those people with a lot of money to buy very expensive, very good horses, and the thrill of the sport, which runs right through to the bottom end, will disappear.

Chris Grayling: I entirely endorse my hon. Friend's comments. To use an analogy, we are talking about the danger of creating a super league at the expense of the rest. There is no doubt that, if the top players in any sport are allowed to accumulate all the commercial benefits in that sport, the smaller players lose out.
	Other sports have governing bodies, set guidelines and negotiate common commercial relationships in television or in other ways, and they then redistribute that money across the whole sport. We have seen the impact on some of the lower division football clubs when those central arrangements break up. The reality is that if it were not for the work done by governing bodies of cricket, soccer and rugby to push money further down the line all around the country, local clubs and local matches would disappear.
	So why should horse racing be any different? Why should we suddenly say, "Actually, it's just a big business, it's operating in an anti-competitive way, so we must tear up all the existing arrangements and create a free-for-all." It makes no sense. Would the Office of Fair Trading go round and say, for example, "We insist for reasons of competition that Rangers and Celtic should be allowed to join the Premiership"? Surely that is a decision for the footballing authorities. Are we going to say that racing should somehow have a different relationship to competition authorities, and that they should have power over what happens in racing as a sport, even though it is inconceivable that they could have similar powers in other sports? It makes no sense.
	There are other concerns. Both my hon. Friends have talked about the potential risks to national hunt racing. That would be a tragic loss, particularly in rural areas that will depend even more on local national hunt race courses when, as I fear that the Government want, the infrastructure of hunting disappears. That will cut a slice off the substance of those local economies. Were national hunt racing to go as well, which might be a consequence of the OFT's report, it would be even more damaging to those communities.
	This makes no sense. The OFT is trying to do something in an area where it does not belong. It is trying to create the sense that a market exists or should exist in an area which I do not believe is all about markets. It will take away a sport and pastime from many parts of this country and will concentrate money and resource in a small number of locations in the hands of big players, and the small people will lose out—the small emerging trainers, the local race courses, and perhaps even the small on-course bookies who will have fewer opportunities to do their business.
	What possible benefit could there be from the OFT looking after the interests of the big guys at the exclusion of the small guys in an area where it should not be in the first place? That is why this issue is so important, why it is right that my hon. Friend the Member for Tewkesbury secured this debate, and why it is appropriate and, I hope, essential—as I hope that the Minister realises—that he watches over the shoulders of the OFT and that he does not let this happen.

George Osborne: Like my other hon. Friends, I congratulate my hon. Friend the Member for Tewkesbury (Mr. Robertson) on securing this debate, and on the good fortune of securing it on the day when the Arms Control and Disarmament (Inspections) Bill passed its Second Reading at remarkable speed.
	I must confess, as I do not write to my hon. Friend the Member for Tewkesbury when I do so, that I am an annual visitor to his constituency, and almost an annual visitor to the constituency of my hon. Friend the Member for Epsom and Ewell (Chris Grayling). Indeed, I am also a visitor to the constituencies of my hon. Friend the Member for Windsor (Mr. Trend) and the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), who has an excellent race course and arguably one that competes with Epsom, certainly in my book.
	I do not have a race course in my constituency, although I do have quite a few owners among my constituents, including Alex Ferguson, who is perhaps the most famous race horse owner at the moment—

Chris Grayling: Notorious.

George Osborne: Or notorious, perhaps, as my hon. Friend suggests. I do not mind saying that, as he appeared all over my Labour opponent's leaflets during the last general election, and I am not here necessarily to defend his interests.
	I confess that I have a personal interest in racing. That is why, when I saw the opportunity to speak today, I took it. I come from a family that has been involved in racing. My grandmother had a full-page obituary in the Racing Post when she died, my family business sponsors a race at Goodwood every year, and my uncle runs a bookmaker. Although I have no pecuniary interest in racing or gambling, many members of my family do.
	I was alerted to the threat that the OFT report poses to British racing not by any of those family members—indeed, as half of them are in the betting industry, it would not have been in their interests—but by a lady called Mrs. Paton-Smith whom I sat next to at the Cheshire agriculture show in June this year. She is an owner, and she lives in the constituency of my neighbour and hon. Friend the Member for Eddisbury (Mr. O'Brien). Over lunch, she talked to me about the OFT report. I asked her to send me details, and she subsequently wrote to me enclosing details of what she feared the OFT report would do to the sport in which she participates.
	She wrote:
	"Without doubt this is the biggest threat to the conduct of racing that we can recall and we would be most grateful"—
	she was speaking for her husband as well—
	"if you agree, if you could lobby the Government to prevent such a scenario emerging."
	This debate represents a good opportunity to lobby the Government.
	As one who is uninitiated in the intricacies of how racing is organised, I must confess that I was initially sceptical of Mrs. Paton-Smith's complaint. As a Conservative, I believe in freer markets and competition in principle and am instinctively against monopoly and restrictive practices. If one examines the proposals in the Office of Fair Trading report, they are superficially attractive. They would allow race courses to set their own fixtures and permit data such as television images to be bought directly from race courses. They would provide that the collective selling of the rights of racing was not acceptable and say that race courses should be able to set their own race programmes and prize money.
	If one starts to consider the implications for the horse racing industry and looks under the surface of the OFT report to examine the unintended consequences that the changes might bring about, the full threat to racing becomes clear. My colleagues said that the OFT report would effectively dismantle one monopoly and replace it with an arguably more dangerous monopoly that would be run by the bookmaking industry, which is also my judgment. Rather than the British Horseracing Board setting fixture lists to ensure a balance of interests throughout the industry, the betting industry would effectively control which race courses were granted which fixtures, which races would be run and when they would be run. That is because, as Peter Savill, the chairman of the BHB said earlier this year, one can
	"count on 2 hands the number of fixtures that can take place profitably each year without bookmaker funding."
	One could probably count the Cheltenham gold cup and the Derby on those two hands but beyond that, as my hon. Friends said, hundreds of races would not be able to survive without the support of the bookmaking industry. The bookmaking industry is dominated by three bookmakers, and it would be able to pick and choose. New all-weather tracks are coming on line and there will be about 3,000 potential fixtures by 2005, but bookmaker demand for no more than about 1,500. The bookmaking industry would be in a strong position to pick the race courses at which its margins were greatest rather than those at which spectator enjoyment was greatest or that were most popular with sponsors or jumping enthusiasts. Let us be honest—I am not the MP for Lingfield—there might be a situation in which all-weather tracks ran races day and night at times that were convenient for punters in betting shops throughout the country. British racing would lose much of its character as a result. We would lose many of the listed races and much national hunt racing, which is such an important part of the rural economy and so important to rural parts of my constituency. As Peter Savill said in a speech that he made earlier this year:
	"The OFT thinks it is helping racecourses to operate as healthy commercial enterprises when in fact its strategy, if allowed to be implemented, will result in a deterioration in the financial position of every single racecourse and racecourse group—without exception."
	That represents a serious threat to the industry.
	There are alternative ways of dealing with some of the genuine conflicts of interest and problems that the OFT report identified. Indeed, the British Horseracing Board has made several proposals on changing its function, removing itself from commercial activity or creating a separate entity that would commercially promote racing and negotiate with bookmakers. Indeed, the board's racing review committee has come up with several imaginative proposals to improve the integrity of support, to establish a better meritocracy, to strengthen jumping and, importantly, to put British breeding on a level playing field with our Irish and French counterparts.
	In the past year, British racing has had record attendances, record prize money and a significant expansion of listed racings, for example. It has exciting plans for the future. Those of us who care about racing and enjoy going to race meets—even if we do not have a financial interest in racing or are involved in the industry—do not want the OFT report to wreck it.

Gerry Sutcliffe: I congratulate the hon. Member for Tewkesbury (Mr. Robertson) on securing the debate, which is a continuation of Department of Trade and Industry questions this morning. I also congratulate the hon. Members for South-West Hertfordshire (Mr. Page), for Epsom and Ewell (Chris Grayling) and for Tatton (Mr. Osborne) on making informed contributions, reflecting their constituency backgrounds and their interests in the well-being of the horse racing industry. The debate provides a welcome opportunity to address an issue that is undoubtedly of interest not just to people directly involved or employed in the sport, but to many of the industry's customers, especially the large number of people who attend meetings, who choose to back horses or who simply enjoy watching the sport at home.
	I would be the first to recognise that horse racing is much more than just a sport. It gives enjoyment and employment to many thousands of people in the UK and, as the hon. Member for Tewkesbury emphasised, it is a significant contributor both directly and indirectly to the UK economy. Substantial further income and economic activity is generated by the betting industry, as well as related activities such as stables and stud farms, some of which attract significant overseas income, as has been mentioned.
	The sport today very much reflects the outcome of a continuing evolution, founded on its long and rich history. I hope that all parts of the sport continue to address and respond to changes in the surrounding world, as they have done in the past, because that is the best way to ensure the sport's future. I am not going to get involved in arguing about the best race course in the country, although if I did, I would add York to the list; nor am I going to get involved in discussing the merits of particular owners, especially as Sir Alex Ferguson is the manager of a team that I support.
	I have noted the concerns raised by the hon. Gentleman and by others in correspondence and a variety of other ways. I am sure that the Office of Fair Trading will take account of those in its continuing investigation into the agreements. I fully understand the desire expressed in the Chamber and elsewhere to retain the essential character of the sport, but that must be balanced against the need for all sections of the business world to comply with the fair trading principles that underlie the competition legislation endorsed by the House. I must make it clear that under our framework of competition law, the decision on the matter is entirely for the Office of Fair Trading. It would be inappropriate for me as the Minister with responsibility for competition to intervene in its deliberations. Perhaps we should reflect on why we have reached this stage.
	For several years, the issue has received much media coverage, some of it alarmist—the "end of racing as we know it" scenario. I do not include Mr. Savill in that. I read his speech and heartfelt thoughts about what might happen to the industry. Some of the coverage has been confusing, so perhaps it is worth clearing the air by setting out the background and explaining briefly the Office of Fair Trading's role before explaining the role that falls to the DTI.
	To determine whether or not certain agreements complied with chapter I of the Competition Act 1998, a little over three years ago, on 28 June 2000, the British Horseracing Board and the Jockey Club notified a number of agreements to the OFT. For those less familiar with the detail of the 1998 Act, it might be helpful to summarise that chapter I expressly prohibits agreements that prevent, restrict or distort competition. The British Horseracing Board and the Jockey Club considered that those agreements, including the orders and rules of racing and general instructions, did not infringe chapter I and they sought a decision from the OFT granting negative clearance—in essence, seeking a clean bill of health for the agreements. In the event that clearance was not granted by the OFT, the parties sought exemption from the chapter I prohibition. It is worth stressing that the parties specified that the application was for a decision, not for guidance. When the OFT receives such a notification, it is its job to apply the Competition Act, no more, no less.
	The applicants are required to state which provisions or effects of agreements might raise questions of compatibility with the chapter 1 prohibition. The parties duly provided a list that included a provision that the OFT has provisionally—I stress "provisionally"—concluded is an infringement of the Competition Act and cannot be granted an exemption. The OFT has also found a number of other provisions within the orders, rules and general instructions that it has provisionally concluded infringe the Competition Act, and cannot be granted an exemption. The OFT has advised the applicants of its provisional conclusions and the theoretical next steps to give them a chance to make oral or written representations, for instance to correct any factual errors or misunderstandings in the provisional conclusions before it makes a decision on whether to proceed with a final infringement decision.
	I understand that the British Horseracing Board and the Jockey Club duly submitted a response to the OFT on 5 September. It is now for the OFT to consider those responses and determine whether or not to proceed with a final infringement decision. It is, however, worth noting that in such cases even after the OFT has issued a final infringement decision a full right of appeal would exist. It would therefore be open to the various industry respondents to challenge the decision. In such circumstances they would have a full right of appeal to the Competition Appeal Tribunal, which would be able to consider the appeal and hear the case again on its merits.
	As for the role of the Department of Trade and Industry, I am sure that the hon. Member for Tewkesbury will understand that the matters being considered by the Office of Fair Trading fall within its ambit, so it would be inappropriate for me as a Minister with responsibility for competition to seek to intervene in its deliberations. However, the hon. Gentleman raised the Competition Act and the exemptions available to the Secretary of State. He cited the block on public transport ticketing schemes. I shall discuss this with him later, but my information is that that block exemption was made under section 9, not section 3, to which he referred.

Laurence Robertson: I would be delighted to meet the Minister to discuss that in more detail, but for the record, there are two ways in which exemptions can be granted under section 4—there are exemptions that the director of the OFT can recommend, but the Minister has the right to provide additional exclusions. My remarks may have led to confusion, but there are two ways in which items can be excluded from chapter I.

Gerry Sutcliffe: I am grateful to the hon. Gentleman. In the spirit of co-operation in which we have tried to proceed, we will look at that again, and I shall discuss it with him further.
	As a competition Minister, it is not my role to be involved in the OFT investigations. However, I shall look at the role of the Department for Culture, Media and Sport, which has been mentioned by the hon. Gentleman and others, particularly the role of the Minister for Sport and Tourism, whose views are outlined in a letter to the hon. Gentleman. We must also ensure that the director general of fair trading is aware of the issues that have been raised in our debate, and we shall make sure that he is contacted.
	The hon. Member for Epsom and Ewell talked about other sports and the way in which they operate. The sponsoring Department for the industry is DCMS—the Minister for Sport and Tourism has taken a particular interest in this issue, and it is right and proper that he does so within the framework of his Department. I am in contact with him, and shall write to him about today's debate and make sure that he is fully aware of Members' concerns. The issue is of major significance to the industry, as horse racing is enjoyed, as has been said, by vast numbers of people, whatever their background, in every part of the country.
	The OFT must conclude its deliberations, and the industry will have the opportunity to put its case. I am sure that hon. Members will continue to make their views known to me and to my right hon. Friend the Minister for Sport and Tourism. It is important that the right decision is reached in the framework of the competition regimes that we have introduced, and that we secure the industry's future.
	The hon. Member for South-West Hertfordshire spoke about the warring factions in the horse racing industry. I am aware of that from other sources. The various factions should realise that it is important that they come together. I believe the review will achieve that. We want a vibrant industry and fair competition. I hope the hon. Gentleman will accept my comments. We will wait to see what transpires and make sure that all the relevant bodies have the information and the serious thoughts that hon. Members have presented. I thank the hon. Member for Tewkesbury for raising the matter.
	Question put and agreed to.
	Adjourned accordingly at twenty-six minutes past Four o'clock.